Audited Financial Statements December 31, 2019

ANNUALFINANCIALSTATEMENTS

AUDITED FINANCIAL STATEMENTS DECEMBER 31, 2019

EXEMPLAR GROWTH AND INCOME FUND | EXEMPLAR INVESTMENT GRADE FUND | EXEMPLAR PERFORMANCE FUND EXEMPLAR GROWTH AND INCOME FUND

Statements of Financial Position As at December 31, December 31, 2019 2018

ASSETS Current assets Financial assets at fair value through profit and loss: Investments $205,025,615 $43,399,558 Warrants 49,069 8,576 Options - long - 409,901 Unrealized gain on forward currency contracts 1,859,627 - Cash and cash equivalents 22,204,692 13,366,587 Margin deposits 19,165,870 1,072,555 Accrued dividends receivable 211,762 62,662 Accrued interest receivable 249,840 - Receivable for securities sold 3,179,671 19,213 Receivable for redeemable units issued 877,171 1,436,249 252,823,317 59,775,301

LIABILITIES Current liabilities Financial liabilities at fair value through profit and loss: Investments sold short 16,289,823 491,443 Unrealized loss on forward currency contracts - 75,067 Payable for securities purchased 3,132,019 1,632,823 Payable for redeemable units redeemed 124,718 46,625 Distributions payable 52,500 - Other liabilities (note 10) 350,532 76,622 (note 10) 19,949,592 2,322,580 0 Net assets attributable to holders of redeemable units0 $232,873,725 $57,452,721 0 Net assets attributable to holders of redeemable units0 Series A0 $60,346,003 $24,634,422 Series AN0 $42,018,693 $5,651,343 Series F0 $72,451,938 $11,406,980 Series FN0 $44,463,580 $11,357,357 Series I0 $- $- Series L0 $3,986,499 $1,166,565 Series LN0 $2,376,436 $707,302 Series ETF0 $7,230,576 $2,528,752 0 Number of redeemable units outstanding (Note 7) Series A (Note 7) 5,683,759 2,341,565 Series AN0 3,799,539 530,335 Series F0 6,762,439 1,086,602 Series FN0 3,937,059 1,043,110 Series I0 - - Series L0 384,970 113,348 Series LN0 214,137 66,088 Series ETF0 350,000 125,000 0 Continued on next page

The accompanying notes are an integral part of these financial statements.

1 EXEMPLAR GROWTH AND INCOME FUND

Statements of Financial Position As at December 31, December 31, 2019 2018

Continued from next page

Net assets attributable to holders of redeemable units per unit Series A $10.62 $10.52 Series AN $11.06 $10.66 Series F $10.71 $10.50 Series FN $11.29 $10.89 Series I $- $- Series L $10.36 $10.29 Series LN $11.10 $10.70 Series ETF $20.66 $20.23

Approved on behalf of the Board of Directors of Arrow Capital Management Inc., the Manager of the Fund:

“James L. McGovern” “Robert W. Maxwell”

James L. McGovern, Director Robert W. Maxwell, Director

The accompanying notes are an integral part of these financial statements.

2 EXEMPLAR GROWTH AND INCOME FUND

Statements of Comprehensive Income (Loss) For the years ended December 31, 2019 2018 $ $

INCOME Net gains (losses) on investments and derivatives: Interest for distribution purposes 996,534 47,176 Dividend income 2,521,136 782,125 Dividend expense on short sales (135,741) (2,076) Securities lending income (note 9) 105,206 52,030 Net realized gain (loss) on investments and derivatives 958,494 1,285,553 Net change in unrealized appreciation (depreciation) in value of investments and derivatives 4,540,225 (244,338) Net gains (losses) on investments and derivatives 8,985,854 1,920,470

Other income items: Interest on cash 100,987 8,982 Foreign exchange gain (loss) (9,542) 165,909 Net change in unrealized foreign exchange gain (loss) (309,275) 16,871 Total net income (loss) 8,768,024 2,112,232

EXPENSES Management fees (note 10) 2,064,706 476,026 Interest expense 1,682 14,109 Unitholder reporting fees 417,948 195,656 Audit fees 28,849 20,067 Legal fees 10,140 12,949 Independent Review Committee fees 6,206 6,187 Custodial fees 16,609 3,071 Security borrowing expenses 107,872 1,135 Commissions and other portfolio transaction costs (note 11) 376,427 223,687 Withholding tax expense 176,949 40,346 Harmonized sales tax 252,442 48,962 Total expenses before manager absorption 3,459,830 1,042,195 Less: expenses absorbed by manager (note 10) - (137,908) Total expenses after manager absorption 3,459,830 904,287

Increase (decrease) in net assets attributable to holders of redeemable units 5,308,194 1,207,945

Increase (decrease) in net assets attributable to holders of redeemable units Series A 1,531,470 421,336 Series AN 644,345 93,097 Series F 1,633,577 264,209 Series FN 1,033,060 336,356 Series I - 26,253 Series L 68,534 17,915 Series LN 41,058 9,920 Series ETF 356,150 38,859

Increase (decrease) in net assets attributable to holders of redeemable units per unit (note 12) Series A 0.35 0.31 Series AN 0.25 0.33 Series F 0.40 0.60 Series FN 0.40 0.38 Series I - 0.26 Series L 0.27 0.28 Series LN 0.28 0.35 Series ETF 0.98 0.64

The accompanying notes are an integral part of these financial statements.

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Statements of Changes in Net Assets Attributable to Holders of Redeemable Units For the years ended December 31, 2019 2018 $ $

Net assets attributable to holders of redeemable units at beginning of year Series A 24,634,422 10,811,870 Series AN 5,651,343 1,469,708 Series F 11,406,980 2,309,251 Series FN 11,357,357 8,580,515 Series I - 1,069,039 Series L 1,166,565 464,543 Series LN 707,302 238,453 Series ETF 2,528,752 - 57,452,721 24,943,379 Increase (decrease) in net assets attributable to holders of redeemable units Series A 1,531,470 421,336 Series AN 644,345 93,097 Series F 1,633,577 264,209 Series FN 1,033,060 336,356 Series I - 26,253 Series L 68,534 17,915 Series LN 41,058 9,920 Series ETF 356,150 38,859 5,308,194 1,207,945 Distributions to holders of redeemable units From net realized gains on investments and derivatives Series A (219,687) (455,251) Series AN (75,508) (99,813) Series F (926,035) (157,828) Series FN (583,064) (262,436) Series I - (16,161) Series L - (21,822) Series LN - (9,363) Series ETF (150,750) (25,000) (1,955,044) (1,047,674)

From return of capital Series A (1,244,896) - Series AN - - Series F (498,634) - Series FN - - Series I - - Series L (87,078) - Series LN - - Series ETF (100,500) - (1,931,108) - Total distributions to holders of redeemable units (3,886,152) (1,047,674)

Redeemable units transactions Proceeds from redeemable units issued (note 1) Series A 43,883,439 17,751,858 Series AN 41,816,252 4,502,230 Series F 64,180,806 9,516,385 Series FN 41,098,610 4,483,992 Series I - 1,000 Series L 3,049,799 749,251 Series LN 1,716,540 499,502 Series ETF 11,826,604 2,489,893 207,572,050 39,994,111 Continued on next page.

The accompanying notes are an integral part of these financial statements.

4 EXEMPLAR GROWTH AND INCOME FUND

Statements of Changes in Net Assets Attributable to Holders of Redeemable Units 2019 2018 $ $

Continued from previous page.

Redeemable units transactions Reinvestments of distributions to holders of redeemable units Series A 1,231,489 389,530 Series AN 73,233 93,090 Series F 1,007,116 120,026 Series FN 539,353 242,610 Series I - 16,161 Series L 69,204 13,913 Series LN - 8,700 Series ETF - 25,000 2,920,395 909,030

Redemption of redeemable units Series A (9,470,234) (4,284,921) Series AN (6,090,972) (406,969) Series F (4,351,872) (645,063) Series FN (8,981,736) (2,023,680) Series I - (1,096,292) Series L (280,525) (57,235) Series LN (88,464) (39,910) Series ETF (7,229,680) - (36,493,483) (8,554,070) Net increase (decrease) from redeemable units transactions 173,998,962 32,349,071

Net increase (decrease) in net assets attributable to holders of redeemable units 175,421,004 32,509,342

Series A 60,346,003 24,634,422 Series AN 42,018,693 5,651,343 Series F 72,451,938 11,406,980 Series FN 44,463,580 11,357,357 Series I - - Series L 3,986,499 1,166,565 Series LN 2,376,436 707,302 Series ETF 7,230,576 2,528,752 Net assets attributable to holders of redeemable units at end of year 232,873,725 57,452,721

The accompanying notes are an integral part of these financial statements.

5 EXEMPLAR GROWTH AND INCOME FUND

Statements of Cash Flows For the years ended December 31, 2019 2018 $ $

Cash flows from (used in) operating activities Increase (decrease) in net assets attributable to holders of redeemable units 5,308,194 1,207,945 Adjustment for: Unrealized foreign exchange (gain) loss on cash and cash equivalents 120,066 (16,024) Net realized (gain) loss on investments and derivatives (958,494) (1,285,553) Net change in unrealized (appreciation) depreciation in value of investments and derivatives (4,540,225) 244,338 Purchase of investments (note 1) (752,964,680) (320,003,955) Proceeds on sale of investments 635,029,484 301,474,821 Change in accrued interest receivable (249,840) - Change in accrued dividends receivable (149,100) (31,669) Change in other liabilities 273,910 43,419 Change in margin deposits (18,093,315) (986,773) Net cash from (used in) operating activities (136,224,000) (19,353,451)

Cash flows from (used in) financing activities Proceeds from redeemable units issued (note 1) 179,116,477 38,106,009 Redemption of redeemable units (33,021,049) (8,000,622) Distributions paid to holders of redeemable units, net of reinvested distributions (913,257) (138,644) Net cash from (used in) financing activities 145,182,171 29,966,743

Net Increase (decrease) in cash and cash equivalents 8,958,171 10,613,292

Cash and cash equivalents at beginning of the year 13,366,587 2,737,271 Unrealized foreign exchange gain (loss) on cash and cash equivalents (120,066) 16,024 Cash and cash equivalents at end of the year 22,204,692 13,366,587

Supplemental information: Interest received* 847,681 56,158 Dividends received, net of withholding tax* 2,195,087 710,110 Interest paid* 1,682 14,109 Dividends paid* 135,741 - *Included as part of cash flows from operating activities

The accompanying notes are an integral part of these financial statements.

6 EXEMPLAR GROWTH AND INCOME FUND Schedule of Investment Portfolio – As at December 31, 2019

Equities - Long - 37.3% No. of Average Fair Security Name Currency Shares/Units Cost ($) Value ($) Communication Services - 1.1% Alphabet Inc., Class 'A' USD 75 130,884 130,445 Alphabet Inc., Class 'C' USD 75 131,005 130,214 Charter Communications Inc., Class 'A' USD 145 90,234 91,336 Comcast Corp., Class 'A' USD 2,720 157,663 158,837 Facebook Inc., Class 'A' USD 315 82,486 83,956 Netflix Inc. USD 220 94,720 92,438 Quebecor Inc., Class 'B', Subordinate Voting Shares CAD 18,000 584,641 596,520 Score Media and Gaming Inc., Class 'A'* CAD 300,000 171,913 216,000 TechTarget USD 10,385 350,607 351,970 Vodafone Group PLC, ADR USD 25,000 640,277 627,524 Walt Disney Co. (The) USD 900 171,631 169,028 2,606,061 2,648,268

Consumer Discretionary - 1.1% Aptiv PLC USD 510 63,602 62,895 BRP Inc., Subordinate Voting Shares CAD 660 39,744 39,046 Carter's Inc. USD 670 92,131 95,129 D.R. Horton Inc. USD 430 29,515 29,454 Garmin Ltd. USD 990 127,082 125,420 Gentex Corp. USD 795 29,933 29,917 Home Depot Inc. (The) USD 245 70,414 69,476 Nike Inc., Class 'B' USD 3,000 374,197 394,668 NVR Inc. USD 10 49,928 49,454 O'Reilly Automotive Inc. USD 55 32,027 31,301 Park Lawn Corp. CAD 40,000 1,072,808 1,171,600 Target Corp. USD 335 56,206 55,773 Tempur Sealy International Inc. USD 1,255 141,950 141,880 TJX Cos. Inc. (The) USD 765 60,267 60,656 Universal Electronics Inc. USD 1,905 133,849 129,278 Whirlpool Corp. USD 250 47,353 47,894 Williams-Sonoma Inc. USD 425 39,376 40,530 Winnebago Industries Inc. USD 475 29,194 32,679 2,489,576 2,607,050

Consumer Staples - 1.8% Colgate-Palmolive Co. USD 660 59,559 58,999 Corby Spirit and Wine Ltd. CAD 28,000 515,655 430,640 Costco Wholesale Corp. USD 320 124,523 122,134 Diageo PLC, ADR* USD 2,500 536,833 546,754 Kimberly-Clark Corp. USD 265 47,861 47,333 Metro Inc. CAD 22,000 1,198,872 1,178,980 Procter & Gamble Co. (The) USD 1,920 316,257 311,403 Sysco Corp. USD 4,305 460,989 478,191 Walgreens Boots Alliance Inc. USD 10,000 772,451 765,625 Walmart Inc. USD 2,065 322,048 318,670 4,355,048 4,258,729

Energy - 7.3% Advantage Oil & Gas Ltd. CAD 310,000 733,093 852,500 ARC Resources Ltd. CAD 155,000 1,021,861 1,267,900 Canadian Natural Resources Ltd. CAD 60,000 2,051,909 2,520,000 Core Laboratories NV* USD 9,000 551,153 440,247 Eco (Atlantic) Oil & Gas Ltd.* CAD 25,000 47,203 24,500 Enbridge Inc. CAD 49,500 2,386,305 2,555,685 Gibson Energy Inc. CAD 60,000 1,370,434 1,595,400 MEG Energy Corp. CAD 25,000 134,641 184,750 Parkland Fuel Corp. CAD 5,065 238,926 241,651 Royal Dutch Shell PLC, ADR, Class 'A' USD 30,000 2,444,218 2,297,654 Secure Energy Services Inc. CAD 80,000 486,956 404,800 Suncor Energy Inc. CAD 65,000 2,606,585 2,766,400

7 EXEMPLAR GROWTH AND INCOME FUND Schedule of Investment Portfolio – As at December 31, 2019

TC Energy Corp. CAD 12,000 764,462 829,920 TOTAL SA, ADR USD 15,000 1,081,848 1,077,147 15,919,594 17,058,554

Financials - 3.3% AGF Management Ltd., Class 'B'* CAD 20,000 113,534 128,800 Alleghany Corp. USD 90 92,635 93,445 American Express Co. USD 430 68,378 69,512 American International Group Inc. USD 1,315 90,638 87,651 Aon PLC USD 335 87,109 90,609 Bank of America Corp. USD 1,145 51,123 52,367 Barclays PLC, ADR USD 95,000 1,108,072 1,174,409 Brookfield Asset Management Inc., Class 'A' CAD 15,025 943,653 1,127,326 Canadian Western Bank CAD 1,605 52,917 51,183 Capital One Financial Corp. USD 245 32,757 32,740 CME Group Inc. USD 255 70,832 66,464 Element Fleet Management Corp.* CAD 75,950 753,230 842,286 Flagstar Bancorp Inc. USD 670 32,600 33,279 ING Groep NV, ADR USD 60,000 934,092 938,852 Intact Financial Corp. CAD 1,415 189,323 198,694 JPMorgan Chase & Co. USD 400 71,427 72,407 Laurentian Bank of Canada* CAD 780 34,055 34,655 Manulife Financial Corp. CAD 60,100 1,454,994 1,584,236 Marsh & McLennan Cos. Inc. USD 720 98,243 104,163 NMI Holdings Inc., Class 'A' USD 805 35,152 34,684 Reinsurance Group of America Inc. USD 360 75,375 76,227 RenaissanceRe Holdings Ltd. USD 255 64,323 64,908 S&P Global Inc. USD 175 60,697 62,050 Sun Life Financial Inc. CAD 595 35,024 35,230 UBS Group AG USD 30,000 487,397 490,073 Walker & Dunlop Inc. USD 365 31,647 30,656 Wells Fargo & Co. USD 540 38,407 37,725 7,107,634 7,614,631

Health Care - 4.1% Alexion Pharmaceuticals Inc. USD 4,500 630,029 631,972 Align Technology Inc. USD 305 109,584 110,516 AMN Healthcare Services Inc. USD 13,000 988,449 1,051,864 Anthem Inc. USD 5,000 1,871,846 1,961,005 Bio-Rad Laboratories Inc., Class 'A' USD 125 60,251 60,063 Bio-Techne Corp. USD 160 45,722 45,607 Cerner Corp. USD 2,750 262,598 262,077 Charles River Laboratories International Inc. USD 205 40,752 40,665 Chartwell Retirement Residences* CAD 5,000 75,018 69,500 Cooper Cos. Inc. (The) USD 195 81,824 81,356 Curaleaf Holdings Inc. CAD 50,000 495,501 409,000 CVS Health Corp. USD 10,000 789,336 964,693 Dentsply Sirona Inc. USD 870 65,628 63,932 Extendicare Inc.* CAD 100,000 806,658 844,000 Green Thumb Industries Inc. CAD 70,000 945,482 895,300 Guardant Health Inc. USD 4,000 382,022 405,875 Magellan Health Inc. USD 2,805 286,638 285,020 Opsens Inc.* CAD 215,000 169,850 191,350 PRA Health Sciences Inc. USD 270 38,953 38,970 Profound Medical Corp. CAD 12,000 97,200 177,000 ProMIS Neurosciences Inc. CAD 50,000 14,395 8,500 Syneos Health Inc. USD 440 33,986 33,982 Vertex Pharmaceuticals Inc. USD 1,000 260,001 284,318 Zymeworks Inc. CAD 10,000 219,101 589,503 8,770,824 9,506,068

Industrials - 2.8% Aecon Group Inc. CAD 37,500 745,918 657,000 AGCO Corp. USD 375 37,709 37,617 Air Canada CAD 1,240 60,653 60,152

8 EXEMPLAR GROWTH AND INCOME FUND Schedule of Investment Portfolio – As at December 31, 2019

Bird Construction Inc.* CAD 110,000 756,283 786,500 Cargojet Inc. CAD 540 53,882 55,798 Carlisle Cos. Inc. USD 620 129,436 130,298 Chorus Aviation Inc.* CAD 150,000 1,151,378 1,213,500 Clean Harbors Inc. USD 585 66,196 65,140 Deluxe Corp. USD 1,715 113,549 111,173 Eaton Corp. PLC USD 265 32,889 32,595 Emerson Electric Co. USD 390 39,092 38,621 Fastenal Co. USD 925 44,527 44,383 Finning International Inc. CAD 25,000 615,313 632,500 Flyht Aerospace Solutions Ltd.* CAD 20,300 29,435 26,390 GDI Integrated Facility Services Inc. CAD 13,000 407,347 439,790 IHS Markit Ltd. USD 665 61,609 65,067 Jacobs Engineering Group Inc. USD 315 37,134 36,744 Johnson Controls International PLC USD 1,060 59,499 56,036 K-Bro Linen Inc. CAD 3,600 145,189 151,380 Morneau Shepell Inc. CAD 2,155 70,851 72,817 MSA Safety Inc. USD 225 37,371 36,919 Old Dominion Freight Line Inc. USD 195 48,258 48,056 Ritchie Bros. Auctioneers Inc. CAD 1,385 75,412 77,172 Saia Inc. USD 280 33,866 33,858 Siemens AG, ADR USD 14,000 1,135,801 1,181,135 Stericycle Inc. USD 960 80,676 79,546 Teledyne Technologies Inc. USD 180 80,804 81,000 Toro Co. (The) USD 530 55,055 54,831 Union Pacific Corp. USD 170 39,991 39,910 Verisk Analytics Inc.* USD 245 47,798 47,512 W.W. Grainger Inc. USD 95 41,145 41,761 6,334,066 6,435,201

Information Technology - 1.4% Adobe Inc. USD 125 50,037 53,534 Arrow Electronics Inc. USD 470 49,945 51,718 ASML Holding NV, Registered USD 2,500 881,818 960,732 BlackBerry Ltd.* CAD 80,000 830,738 668,000 Cardtronics PLC* USD 760 41,000 44,065 CGI Inc. CAD 1,470 154,886 159,745 Constellation Software Inc. CAD 30 37,990 37,835 CSG Systems International Inc. USD 560 41,271 37,654 EVERTEC Inc. USD 1,225 50,729 54,148 Exlservice Holdings Inc. USD 580 53,106 52,314 II-VI Inc. USD 1,310 57,723 57,276 Keysight Technologies Inc. USD 575 78,576 76,630 Kinaxis Inc. CAD 4,000 412,621 400,080 Knowles Corp. USD 1,320 37,081 36,253 Legend Power Systems Inc. CAD 180,000 138,673 34,200 Microsoft Corp. USD 950 186,381 194,542 Power Integration Inc. USD 355 43,538 45,596 Rogers Corp. USD 270 45,340 43,731 salesforce.com Inc. USD 230 47,412 48,575 Semtech Corp. USD 800 52,609 54,955 Shopify Inc., Class 'A' CAD 250 113,669 129,075 SYNNEX Corp. USD 295 47,135 49,340 TTEC Holdings Inc. USD 795 39,899 40,902 3,492,177 3,330,900

Materials - 3.3% Air Products and Chemicals Inc. USD 175 53,459 53,401 Albemarle Corp.* USD 6,500 557,968 616,500 Ball Corp. USD 1,175 102,610 98,673 Barrick Gold Corp. CAD 110,000 2,272,735 2,653,200 Cascades Inc. CAD 5,475 64,513 61,375 Dundee Precious Metals Inc. CAD 100,000 439,976 558,000 Interfor Corp. CAD 55,000 761,152 806,850 Intertape Polymer Group Inc. CAD 10,000 186,747 166,200

9 EXEMPLAR GROWTH AND INCOME FUND Schedule of Investment Portfolio – As at December 31, 2019

Linde PLC USD 435 118,157 120,261 Lithium Americas Corp.* CAD 30,700 170,084 127,712 Louisiana Pacific Corp.* USD 6,410 245,645 246,964 Martin Marietta Materials Inc. USD 215 76,732 78,072 Materion Corp. USD 2,155 168,167 166,363 Neenah Paper Inc. USD 585 55,821 53,502 Schweitzer-Mauduit International Inc. USD 1,075 63,674 58,616 Scotts Miracle-Gro Co. (The), Class 'A' USD 1,115 149,308 153,736 SilverCrest Metals Inc. CAD 12,500 91,000 109,625 Vulcan Materials Co. USD 450 84,757 84,140 Wesdome Gold Mines Ltd. CAD 135,000 723,124 1,372,950 6,385,629 7,586,140

Real Estate - 6.1% Alexander & Baldwin Inc. USD 2,005 59,870 54,571 Allied Properties REIT CAD 17,000 818,106 885,190 American Tower Corp. USD 215 60,727 64,163 Brookfield Property Partners L.P. CAD 68,500 1,815,801 1,625,505 BSR REIT USD 63,300 756,653 961,719 Choice Properties REIT CAD 40,000 529,818 556,400 Colliers International Group Inc. CAD 4,855 439,322 490,841 Cominar REIT CAD 70,000 862,495 991,200 Crown Castle International Corp. USD 200 35,954 36,918 CT REIT* CAD 25,000 339,110 403,500 Dream Industrial REIT* CAD 3,590 46,886 47,173 Easterly Government Properties Inc. USD 4,470 136,447 137,741 European Residential REIT CAD 100,000 465,716 465,000 FirstService Corp. CAD 365 43,782 44,125 Franklin Street Properties Corp. USD 5,635 63,362 62,636 Granite REIT, Stapled Units CAD 13,445 875,031 887,101 Independence Realty Trust USD 13,970 255,502 255,422 Inovalis REIT CAD 75,000 781,767 799,500 InterRent REIT* CAD 50,000 602,775 782,000 Minto Apartment REIT CAD 40,000 726,167 926,000 NorthWest Healthcare Properties REIT CAD 10,085 122,266 120,314 Office Properties Income Trust USD 2,905 120,898 121,241 Summit Industrial Income REIT* CAD 3,650 46,460 44,019 Weyerhaeuser Co. USD 40,000 1,429,771 1,568,648 WPT Industrial REIT USD 100,000 1,800,098 1,790,700 13,234,784 14,121,627

Utilities - 5.0% Algonquin Power & Utilities Corp.* CAD 62,955 931,520 1,156,483 AltaGas Ltd. CAD 6,465 128,962 127,878 American Water Works Co. Inc. USD 1,925 308,135 307,089 ATCO Ltd., Class 'I' CAD 985 49,338 49,023 Boralex Inc., Class 'A' CAD 35,300 690,994 863,438 Brookfield Infrastructure Partners L.P. USD 15,615 950,368 1,013,640 Brookfield Infrastructure Partners L.P. CAD 20,390 1,103,586 1,322,495 Brookfield Renewable Partners L.P. CAD 12,490 754,063 753,147 Canadian Utilities Ltd., Class 'A' CAD 2,340 92,587 91,658 Capital Power Corp. CAD 4,900 161,846 168,511 El Paso Electric Co. USD 4,025 358,500 354,838 Innergex Renewable Energy Inc. CAD 37,300 569,537 628,878 Maxim Power Corp. CAD 53,300 155,061 97,006 Northland Power Inc. CAD 8,620 234,847 234,464 Superior Plus Corp. CAD 170,000 2,042,798 2,135,200 TransAlta Corp. CAD 72,530 660,067 673,078 TransAlta Renewables Inc. CAD 111,420 1,486,376 1,729,238 10,678,585 11,706,064 81,373,978 86,873,232

10 EXEMPLAR GROWTH AND INCOME FUND Schedule of Investment Portfolio – As at December 31, 2019

Equities - Short - (0.7%) No. of Fair Sector Name Currency Shares/Units Proceeds ($) Value ($) Industrials-(0.4%) Roper Technologies Inc. USD (2,000) (918,777) (919,971)

Information Technology - (0.3%) Square Inc., Class 'A' USD (8,000) (671,295) (649,898) (1,590,072) (1,569,869) Funds - Long - 30.7% No. of Average Fair Security Name Currency Shares Cost ($) Value ($) Exemplar Investment Grade Fund Series ETF** CAD 177,400 3,556,217 3,563,079 Global X Silver Miners ETF USD 5,000 216,946 215,429 iPath Bloomberg Cocoa Subindex Total Return ETN USD 2,000 73,114 76,069 iPath Series B Bloomberg Livestock Subindex Total Return ETN* USD 9,000 536,259 535,613 iShares 7-10 Year Treasury Bond ETF* USD 65,000 9,475,812 9,303,202 iShares Barclays 1-3 Year Treasury Bond Fund USD 83,000 9,283,090 9,121,392 iShares Barclays 3-7 Year Treasury Bond Fund* USD 85,000 14,212,291 13,879,876 iShares Floating Rate Bond ETF* USD 29,035 1,946,439 1,919,857 iShares iBoxx $ Investment Grade Corporate Bond ETF USD 18,150 3,054,096 3,015,849 iShares MBS ETF USD 19,700 2,802,575 2,764,330 iShares MSCI United Kingdom ETF* USD 10,000 440,722 442,806 iShares Silver Trust* USD 80,000 1,709,910 1,732,785 iShares TIPS Bond ETF USD 35,000 5,338,134 5,298,019 ProShares UltraPro Short Russell 2000* USD 10,000 235,813 234,258 ProShares UltraShort QQQ* USD 135,000 5,336,434 4,119,650 Proshares UltraShort S&P 500* USD 115,000 4,525,956 3,712,425 SPDR Gold Shares* USD 51,000 9,220,304 9,463,703 Vanguard REIT ETF* USD 17,500 2,102,894 2,108,618 74,067,006 71,506,960

Funds - Short - (6.2%) No. of Average Fair Security Name Currency Shares Cost ($) Value ($) iShares Barclays 3-7 Year Treasury Bond Fund USD (1,000) (291,179) (302,614) iShares Floating Rate Bond ETF USD (51,500) (10,637,520) (11,079,235) iShares iBoxx $ Investment Grade Corporate Bond ETF USD (12,000) (3,211,144) (3,338,105) (14,139,843) (14,719,954)

Fixed Income - Long - 20.0% Maturity Coupon Par Average Fair Security Name Date Rate (%) Currency Value ($) Cost ($) Value ($) Corporate Bonds - 0.1% Bell Canada, Callable 09-10-29 2.90 CAD 290,000 289,626 284,616 289,626 284,616

Federal Bonds - 19.5% Government of Canada* 11-01-21 1.25 CAD 4,000,000 3,965,900 3,968,233 United States Treasury Bond 11-15-28 3.13 USD 12,000,000 16,484,986 17,148,773 United States Treasury Bond* 02-15-29 2.63 USD 12,000,000 16,284,642 16,529,426 United States Treasury Bond 08-31-21 1.50 USD 2,000,000 2,668,500 2,593,448 United States Treasury Bond* 11-30-24 1.50 USD 4,000,000 5,220,181 5,153,012 44,624,209 45,392,892

Provincial Bonds - 0.4% Province of Alberta 06-01-30 2.05 CAD 1,000,000 999,410 967,915 45,913,245 46,645,423

11 EXEMPLAR GROWTH AND INCOME FUND Schedule of Investment Portfolio – As at December 31, 2019

Warrants - Long - 0.0% Strike Maturity Average Fair Security Name Currency Price ($) Date Quantity Cost ($) Value ($) Acerus Pharmaceuticals Corp. CAD 0.40 06-28-20 197,000 8,865 1,970 Edgewater Wireless Systems Inc. CAD 0.24 08-20-23 400,000 - - Helius Med Technologies Inc CAD 12.25 04-10-21 6,400 5,944 - Hudson Resources Inc. CAD 0.50 02-16-20 91,500 2,548 - Intelgenx Technologies Corp. CAD 0.15 10-03-10 50,500 13,394 - Medreleaf Corp. CAD 34.50 01-31-20 3,000 2,700 - Pioneering Technology Corp. CAD 1.80 03-21-21 33,000 - - Profound Medical Corp. CAD 1.40 09-20-20 97,500 3,963 26,614 Qyou Media Inc. CAD 0.37 07-19-20 160,000 - - Replicel Life Sciences Inc. CAD 2.00 02-24-20 64,000 - - Theralase Technologies Inc. CAD 0.38 11-10-21 258,000 46,570 18,535 Titan Medical Inc. CAD 0.75 09-20-21 195,000 14,625 1,950 Titan Medical Inc. CAD 0.50 03-16-21 32,500 - - 98,609 49,069 Commissions (50,914) Total Investments - 81.1% 185,672,009 188,784,861 Derivatives (see schedule of derivative instruments) - 0.8% 1,859,627 Cash and Other Net Assets (Liabilities) - 18.1% 42,229,237 Net Assets Attributable to Holders of Redeemable Units - 100.0% 232,873,725

*Denotes all or part of securities on loan ** Fund is managed by Arrow Capital Management Inc.

Schedule of Derivative Instruments

Forward Currency Contracts - 0.8%

Purchased Sold Credit Contract Maturity Unrealized Counterparty Currency Notional Value ($) Currency Notional Value ($) Rating Rate Date Gain/(Loss) ($) BNY Mellon CAD 75,585,713 USD (56,850,000) A1 1.3296 01-06-20 1,764,340 BNY Mellon CAD 9,834,255 USD (7,500,000) A1 1.3112 01-06-20 95,287 Unrealized Gains 1,859,627

Total Derivative Instruments at Fair Value $1,859,627

12 EXEMPLAR GROWTH AND INCOME FUND NOTES TO THE AUDITED FINANCIAL STATEMENTS – FUND SPECIFIC INFORMATION For the years ended December 31, 2019 and 2018

The investment objective of the Exemplar Growth and Income Fund (the “Fund”) is to achieve long term growth and preservation of capital. The Fund will invest up to all of its assets in a diversified mix of other mutual funds (in order to gain indirect exposure to securities that the Fund would otherwise directly invest in), and may also invest in common shares, preferred shares, treasury bills, short-term notes, debentures, bonds and forwards. The Fund invests primarily in Canadian securities.

RISK MANAGEMENT

The Fund’s overall risk management program seeks to maximize the returns derived for the level of risk to which the Fund is exposed and seeks to minimize potential adverse effects on the Fund's financial performance. All investments present a risk of loss of capital. The maximum loss of capital on long equity and bond investments is limited to the fair value of those positions. The maximum loss on equities and debt sold short can be unlimited.

The management of these risks is carried out by the Arrow Capital Management Inc. the (“Manager”) in accordance with the Fund’s Declaration of Trust.

A general discussion of financial risk management for the Exemplar Growth and Income Fund, Exemplar Performance Fund, Exemplar Investment Grade Fund and Exemplar Performance Fund , the (“Exemplar Funds”), appears as Note 4: FINANCIAL INSTRUMENTS – RISK MANAGEMENT.

Credit Risk

The analysis below summarizes the credit quality of the Fund's debt portfolio at December 31, 2019 and 2018.

Percentage of total debt securities Credit Rating* December 31, 2019 December 31, 2018 % % AAA 97.3% - AA 2.1% - A 0.0% - BBB 0.6% - Below BBB 0.0% - Not Rated 0.0% - Total 100.0% - * Credit ratings are obtained from Standard & Poor's, Moody's and / or Dominion Bond Rating Service.

The Fund measures credit risk and expected credit losses using probability of default, exposure at default and loss given default. Management considers both historical analysis and forward-looking information in determining any expected credit loss. At December 31, 2019 and 2018, all amounts due from brokers, cash and cash equivalents and margin deposits are held with counterparties with a credit rating of Aa3 or higher. Management consider the probability of default and the counterparties have a strong capacity to meet their contractual obligations in the near term. As a result, no loss allowance has been recognized based on 12 month expected credit losses as any such impairment would be wholly insignificant to the Fund.

The Fund is exposed to counterparty credit risk on cash, cash held at the broker, margin deposits, options and receivables for securities sold. The Fund’s brokerage agreement requires cash collateral up to 150% of the fair value of securities sold short. The Fund's prime brokerage services are provided by BMO Nesbitt Burns which has a credit rating of Aa2 (2018 Aa2) as rated by Moody's bond rating services. Cash collateral has been provided to BMO Nesbitt Burns in accordance with terms of derivative transaction agreements and is presented as ‘Margin deposits’ in the Statements of Financial Position. The Fund’s option agreements are with CIBC World Markets which has a credit rating of Aa2 (2018 Aa2). The Fund’s forward agreements are with Bank of New York Mellon which has a credit rating of A1 (2018 A1). The Fund’s broker and custodial services are provided by CIBC Mellon Trust Company which has a credit rating as rated by Moody's bond rating services of A1 (2018 A1).

The Fund is exposed to credit risk on cash deposits held at CIBC Mellon Trust Company which has a credit rating as rated by Moody’s bond rating services of A1 (2018 A1). In 2018 the Fund was exposed to credit risk on cash deposits held at TD Canada Trust which had a credit rating of Aa1.

13 EXEMPLAR GROWTH AND INCOME FUND NOTES TO THE AUDITED FINANCIAL STATEMENTS – FUND SPECIFIC INFORMATION For the years ended December 31, 2019 and 2018

The Fund may participate in securities lending up to a maximum of 50% of the aggregate net asset value of the Fund, excluding the collateral held in respect to such loans, and is exposed to counterparty risk on all such loans, if any. The credit risk related to the securities lending program is limited as the Fund holds a minimum collateral equal to 102% of the fair value of the loaned securities. The collateral and loaned securities are marked to market on each valuation date. All counterparties have a credit rating equivalent to a Moody’s credit rating of not less than Baa2 (2018 Aa3).

There are risks involved in dealing with custodians or brokers who settle trades with regard to the segregation of assets. It is expected that all securities and other assets deposited with custodians or brokers will be clearly identified as being assets of the Fund. Therefore, the Fund should not be exposed to credit risk with respect to such parties. However, it may not always be possible to achieve this segregation, so the portfolio of the Fund may experience increased exposure to credit risk associated with the applicable custodians or brokers. The Fund’s custodial services are provided by CIBC Mellon Trust Company which has a credit rating as rated by Moody's bond rating services of A1 (2018 A1).

Liquidity Risk

Liquidity risk is the risk that the Fund will encounter difficulty in meeting obligations associated with financial liabilities. The Fund is exposed to daily cash redemptions which are redeemable on demand at the holder’s option and payable within 10 business days after the redemption date and as such, retains sufficient cash to fund anticipated redemptions.

Market Risk

The following include sensitivity analyses that show how the net assets attributable to holders of redeemable units would have been affected by a reasonably possible change in the relevant risk variable at each reporting date. In practice, the actual results may differ and the differences could be material.

(a) Currency Risk

The table below indicates the Fund’s exposure to other currencies as at December 31, 2019 and 2018 in Canadian dollar terms. The table also illustrates the potential impact on the net assets attributable to holders of redeemable units if the Canadian dollar had strengthened or weakened by 10% in relation to each of the other currencies, with all other variables held constant. Non-monetary items include equities, funds and warrants. Monetary items include fixed income, forward contracts, options on derivatives, cash and cash equivalents, margin deposits, margin loans and other current receivables and payables.

December 31, 2019 Impact on net assets attributable to holders of Exposure redeemable units Monetary Non-Monetary Total Monetary Non-Monetary Total Currency $ $ $ $ $ $ United States Dollar - Long 68,643,774 100,245,792 168,889,566 6,864,377 10,024,579 16,888,956 United States Dollar - Short (86,574,117) (16,289,823) (102,863,940) (8,657,412) (1,628,982) (10,286,394) Japanese Yen - Long 3,683,064 - 3,683,064 368,306 - 368,306 Total (14,247,279) 83,955,969 69,708,690 (1,424,729) 8,395,597 6,970,868 % of net assets attributable to holders of redeemable units (6.1%) 36.1% 29.9% (0.6%) 3.6% 3.0%

December 31, 2018 Impact on net assets attributable to holders of Exposure redeemable units Monetary Non-Monetary Total Monetary Non-Monetary Total Currency $ $ $ $ $ $ United States Dollar - Long 1,107,835 26,767,942 27,875,777 110,784 2,676,794 2,787,578 United States Dollar - Short (4,777,043) (229,285) (5,006,328) (477,704) (22,929) (500,633) Japanese Yen - Long 2 - 2 - - - Total (3,669,206) 26,538,657 22,869,451 (366,920) 2,653,865 2,286,945 % of net assets attributable to holders of redeemable units (6.4%) 46.2% 39.8% (0.6%) 4.6% 4.0%

14 EXEMPLAR GROWTH AND INCOME FUND NOTES TO THE AUDITED FINANCIAL STATEMENTS – FUND SPECIFIC INFORMATION For the years ended December 31, 2019 and 2018

(b) Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument may fluctuate because of changes in market interest rates. The Fund holds securities with fixed interest rates that expose the Fund to fair value interest rate risk. Currently, the Fund does not hedge its interest rate risk.

The table below summaries the Fund’s exposure to interest rate risk as at December 31, 2019. The table also illustrates the potential impact or sensitivity, on the net assets attributable to holders of redeemable units if the prevailing levels of market interest rates changed by 1.0%, assuming a parallel shift in the yield curve with all other variables hold constant. The Fund was not exposed to interest rate risk as at 2018.

Total Exposure Term to Maturity December 31, 2019 December 31, 2018 Less than 1 year $ - $ - 1-3 years 6,561,681 - 3-5 years 5,153,012 - Greater than 5 years 34,930,730 - Total $ 46,645,423 $ - Sensitivity: Total $ sensitivity to net assets attributable to holders of redeemable units +/- $ 3,134,242 +/- $ - Total % sensitivity to net assets attributable to holders of redeemable units 1.3% 0.0%

The Fund's policy is to manage price risk through diversification and selection of investments within specified limits established by the investment restrictions within the prospectus, as summarized below.

To achieve the investment objective, the Manager utilizes the following allocation guidelines: 30-90% equity securities, 10-50% fixed income securities and 0-50% money market instruments. Fixed income securities may include investment grade, non-investment grade and distressed fixed income securities, issued by Canadian or non-Canadian corporations, trusts and international agencies and governments. The Fund is also permitted to invest in convertible bonds and debentures, loans, preferred shares, exchange traded funds and equities. The Fund may also hold cash. To achieve these target ranges, the Fund may invest in either individual securities or the Manager may invest up to 100% of the assets of the Fund in underlying funds.

The Fund may invest in foreign securities to an extent that will vary from time to time but is not typically expected to exceed 49% of its assets at the time that foreign securities are purchased, however, as the Fund intends to invest certain of its assets in securities of other investment funds that may themselves invest in foreign securities, the actual exposure of the Fund to investments in foreign securities may exceed this amount.

As at December 31, 2019, the impact on net assets of the Fund due to a 5% change in market prices of equity and fund securities is $7,106,772 (2018 $2,145,835) (all other variables held constant).

Concentration Risk

Concentration risk arises as a result of the concentration of exposures within the same category, whether it is geographical location, product type, industry sector or counterparty type.

The following is a summary of the Fund's concentration risk as of December 31, 2019 and 2018:

15 EXEMPLAR GROWTH AND INCOME FUND NOTES TO THE AUDITED FINANCIAL STATEMENTS – FUND SPECIFIC INFORMATION For the years ended December 31, 2019 and 2018

December 31, 2019 December 31, 2018 Market Segment Long (%) Short (%) Long (%) Short (%) Communication Services 1.1 - 1.2 - Consumer Discretionary 1.1 - 2.4 - Consumer Staples 1.8 - 4.1 - Corporate Bonds 0.1 - - - Derivatives 0.8 - 0.7 (0.1) Energy 7.3 - 4.5 - Federal Bonds 19.5 - - - Financials 3.3 - 2.6 - Funds 30.7 (6.2) 41.2 (0.4) Health Care 4.1 - 3.2 - Industrials 2.8 (0.4) 2.5 - Information Technology 1.4 (0.3) 1.3 (0.5) Materials 3.3 - 3.4 - Provincial Bonds 0.4 - - - Real Estate 6.1 - 4.9 - Utilities 5.0 - 4.4 - Totals 88.8 (6.9) 76.4 (1.0)

FAIR VALUE MEASUREMENT

A general discussion of fair value measurement for the Exemplar Funds appears as Note 5: FINANCIAL INSTRUMENTS – FAIR VALUE MEASUREMENT.

The following table illustrates the classification of the Fund's assets and liabilities measured at fair value within the fair value hierarchy as at December 31, 2019 and 2018:

December 31, 2019 Level 1 Level 2 Level 3 Total $ $ $ $ Financial assets Equities 86,873,232 - - 86,873,232 Fixed income - 46,645,423 - 46,645,423 Funds 71,506,960 - - 71,506,960 Derivatives 49,069 1,859,627 - 1,908,696 158,429,261 48,505,050 - 206,934,311

Financial liabilities Equities sold short (1,569,869) - - (1,569,869) Fixed income sold short - - - - Funds sold short (14,719,954) - - (14,719,954) Derivatives sold short - - - - (16,289,823) - - (16,289,823) Total 142,139,438 48,505,050 - 190,644,488

16 EXEMPLAR GROWTH AND INCOME FUND NOTES TO THE AUDITED FINANCIAL STATEMENTS – FUND SPECIFIC INFORMATION For the years ended December 31, 2019 and 2018

December 31, 2018 Level 1 Level 2 Level 3 Total $ $ $ $ Financial assets Equities 19,724,882 - - 19,724,882 Fixed income - - - - Funds 23,674,676 - - 23,674,676 Derivatives 418,477 - - 418,477 43,818,035 - - 43,818,035

Financial liabilities Equities sold short (262,158) - - (262,158) Fixed income sold short - - - - Funds sold short (229,285) - - (229,285) Derivatives sold short - (75,067) - (75,067) (491,443) (75,067) - (566,510) Total 43,326,592 (75,067) - 43,251,525

All fair value measurements above are recurring. Fair values are classified as level 1 when the related security or derivative is actively traded and a quoted price is available. If an instrument classified as level 1 subsequently ceases to be actively traded, it is transferred out of level 1. In such cases, instruments are reclassified into level 2, unless the measurement of its fair value requires the use of significant unobservable inputs, in which case it would be classified as level 3.

The Manager is responsible for performing the fair value measurements included in the financial statements of the Fund, including level 3 measurements if any. The Manager obtains pricing from a third party pricing vendor which is monitored and reviewed daily by the Manager. In addition, at each financial reporting date, the Manager reviews and approves all level 3 fair value measurements, if applicable. a) Equities and Funds

The Fund's equity positions and some investments in funds are classified as Level 1 as the securities are actively traded on a recognized exchange and a quoted price is available. Equity positions which have resale restrictions but otherwise trade on the market are classified as Level 2. Funds that do not trade on an exchange are valued by valuation agents and are classified as Level 2. b) Bonds

The Fund's bond holdings are comprised of Canadian and US bonds. Bond pricing is obtained from bid and ask prices provided by independent security pricing services or recognized investment dealers. Bond prices may be derived by using models which include inputs such as interest rate curves, credit spreads and volatilities. The inputs that are significant to valuation are generally observable and therefore the Fund's bonds have been classified as Level 2. c) Derivatives

Derivatives consist of warrant, options and forward currency contracts and futures. Warrants are valued using models and valuation techniques commonly used in the industry, including inputs such as underlying stock price, restrictions on exercise and days to expiry. Exchange traded warrants are classified as Level 1. Long and short futures contracts and options are exchange traded and are classified as Level 1 as they are actively traded on a recognized exchange and a quoted price is available. When the inputs that are significant to valuation are generally observable, the warrants are classified as level 2. Forward currency contracts are valued based primarily on the contract notional amount and the difference between the contract rate and the forward market rate for the same currency, adjusted for counterparty risk. Forward currency contracts are classified as Level 2.

As at December 31, 2019, the Fund did not hold any level 3 financial instruments. There were no transfers between levels 1, 2 and 3 during the years ended December 31, 2019 and 2018.

17 EXEMPLAR INVESTMENT GRADE FUND

Statements of Financial Position As at December 31, December 31, 2019 2018

ASSETS Current assets Financial assets at fair value through profit and loss: Investments $161,905,961 $152,897,492 Options - long - 5,455 Unrealized gain on forward currency contracts - 26,662 Unrealized gain on futures contracts - long 199,457 - Unrealized gain on futures contracts - short 456,817 - Unrealized gain on swaps contracts 618,435 1,705,608 Cash and cash equivalents 14,106,418 973,970 Margin deposits 3,555,387 4,233,242 Accrued dividends receivable - 7,917 Accrued interest receivable 1,175,115 1,105,232 Receivable for redeemable units issued 165,669 73,386 182,183,259 161,028,964

LIABILITIES Current liabilities Financial liabilities at fair value through profit and loss: Unrealized loss on forward currency contracts 23,801 - Unrealized loss on futures contracts - long - 253,139 Unrealized loss on futures contracts - short - 1,086,473 Unrealized loss on swap contracts 78,835 - Margin loans 816,388 862,843 Accrued dividends payable 18,750 11,250 Payable for redeemable units redeemed 578,841 357,319 Other liabilities (note 10) 194,595 168,518 1,711,210 2,739,542

Net assets attributable to holders of redeemable units $180,472,049 $158,289,422

Net assets attributable to holders of redeemable units Series A $28,805,038 $33,856,860 Series AI $7,814,492 $4,622,962 Series AN $7,253,855 $5,732,043 Series F $79,517,362 $83,253,439 Series FI $21,275,560 $6,243,654 Series FN $27,271,369 $19,403,769 Series I $5,937 $5,544 Series G $893,330 $783,431 Series U $106,443 N/A Series ETF $7,528,663 $4,387,720

Continued on next page.

The accompanying notes are an integral part of these financial statements.

18 EXEMPLAR INVESTMENT GRADE FUND

Statements of Financial Position As at December 31, December 31, 2019 2018

Continued from previous page.

Number of redeemable units outstanding (note 7) Series A 3,002,110 3,612,725 Series AI 904,532 537,584 Series AN 707,852 577,037 Series F 8,060,067 8,684,027 Series FI 2,385,247 707,025 Series FN 2,625,491 1,931,962 Series I 549 533 Series G 66,984 57,951 Series U 8,108 N/A Series ETF 375,000 225,000

Net assets attributable to holders of redeemable units per unit Series A $9.59 $9.37 Series AI $8.64 $8.60 Series AN $10.25 $9.93 Series F $9.87 $9.59 Series FI $8.92 $8.83 Series FN $10.39 $10.04 Series I $10.81 $10.40 Series G - USD* $13.34 $13.52 Series U - USD* $13.13 N/A Series ETF $20.08 $19.50

* USD/CAD Foreign Exchange Rate $0.7701 $0.7607

Approved on behalf of the Board of Directors of Arrow Capital Management Inc., the Manager of the Fund:

“James L. McGovern” “Robert W. Maxwell”

James L. McGovern, Director Robert W. Maxwell, Director

The accompanying notes are an integral part of these financial statements.

19 EXEMPLAR INVESTMENT GRADE FUND

Statements of Comprehensive Income For the years ended December 31, 2019 2018 $ $

INCOME Net gains (losses) on investments and derivatives: Interest for distribution purposes 7,891,499 6,194,183 Dividend income 155,800 437,037 Securities lending income (note 9) 3,050 1,692 Net realized gain (loss) on investments and derivatives 659,375 (3,399,440) Net change in unrealized appreciation (depreciation) in value of investments and derivatives 3,784,019 (2,425,559) Net gains (losses) on investments and derivatives 12,493,743 807,913

Other income items: Interest on cash - 14,941 Foreign exchange gain (loss) 13,261 366,332 Net change in unrealized foreign exchange gain (loss) (9,756) (9,995) Total net income (loss) 12,497,248 1,179,191

EXPENSES Management fees (note 10) 1,703,592 1,506,393 Interest expense 16,578 7,526 Unitholder reporting fees 420,023 361,946 Audit fees 27,745 25,916 Legal fees 10,140 6,947 Independent Review Committee fees 6,206 6,187 Custodial fees 18,323 16,068 Commissions and other portfolio transaction costs (note 11) 14,170 35,281 Commissions on Futures (note 11) 23,963 22,775 Harmonized sales tax 183,938 169,307 Total expenses before manager absorption 2,424,678 2,158,346 Less: expenses absorbed by manager (note 10) (115,036) (98,417) Total expenses after manager absorption 2,309,642 2,059,929

Increase (decrease) in net assets attributable to holders of redeemable units 10,187,606 (880,738)

Increase (decrease) in net assets attributable to holders of redeemable units Series A 1,711,716 (357,065) Series AI 360,722 (43,986) Series AN 371,537 (56,684) Series F 4,855,331 (393,950) Series FI 1,059,615 (30,017) Series FN 1,433,869 (131,424) Series I 393 23 Series G 13,232 150,035 Series U (53) N/A Series ETF 381,244 (17,670)

Increase (decrease) in net assets attributable to holders of redeemable units per unit (note 12) Series A 0.52 (0.10) Series AI 0.42 (0.09) Series AN 0.51 (0.10) Series F 0.58 (0.04) Series FI 0.42 (0.05) Series FN 0.58 (0.08) Series I 0.74 0.04 Series G 0.21 1.20 Series U (0.01) N/A Series ETF 1.05 (0.08)

The accompanying notes are an integral part of these financial statements.

20 EXEMPLAR INVESTMENT GRADE FUND

Statements of Changes in Net Assets Attributable to Holders of Redeemable Units For the years ended December 31, 2019 2018 $ $

Net assets attributable to holders of redeemable units at beginning of year Series A 33,856,860 32,007,181 Series AI 4,622,962 4,575,260 Series AN 5,732,043 5,292,300 Series F 83,253,439 84,466,716 Series FI 6,243,654 5,446,419 Series FN 19,403,769 15,980,560 Series I 5,544 5,521 Series G 783,431 1,759,517 Series U - N/A Series ETF 4,387,720 2,003,385 158,289,422 151,536,859 Increase (decrease) in net assets attributable to holders of redeemable units Series A 1,711,716 (357,065) Series AI 360,722 (43,986) Series AN 371,537 (56,684) Series F 4,855,331 (393,950) Series FI 1,059,615 (30,017) Series FN 1,433,869 (131,424) Series I 393 23 Series G 13,232 150,035 Series U (53) N/A Series ETF 381,244 (17,670) 10,187,606 (880,738) Distributions to holders of redeemable units From net investment income Series A (628,255) (873,851) Series AI (176,244) (126,455) Series AN (167,466) (130,126) Series F (1,985,252) (2,481,945) Series FI (727,145) (187,396) Series FN (689,786) (468,381) Series I (176) (180) Series G (21,731) (44,895) Series U (2,105) N/A Series ETF (192,487) (125,500) (4,590,647) (4,438,729)

From return of capital Series A (314,129) (140,944) Series AI (189,801) (107,949) Series AN - - Series F (527,725) (177,282) Series FI (370,993) (111,395) Series FN - - Series I - - Series G (3,835) (2,363) Series U (153) N/A Series ETF (28,763) - (1,435,399) (539,933) Total distributions to holders of redeemable units (6,026,046) (4,978,662)

Continued on next page.

The accompanying notes are an integral part of these financial statements.

21 EXEMPLAR INVESTMENT GRADE FUND

Statements of Changes in Net Assets Attributable to Holders of Redeemable Units For the years ended December 31, 2019 2018 $ $ Continued from previous page.

Redeemable units transactions Proceeds from redeemable units issued (note 1) Series A 4,639,662 8,916,811 Series AI 4,925,919 785,869 Series AN 3,792,808 2,894,175 Series F 14,333,969 28,239,588 Series FI 32,370,417 1,653,649 Series FN 13,134,253 9,239,274 Series I - - Series G 104,225 253,237 Series U 108,720 N/A Series ETF 4,480,893 5,015,869 77,890,866 56,998,472

Reinvestments of distributions to holders of redeemable units Series A 784,236 845,558 Series AI 123,357 76,023 Series AN 157,029 117,558 Series F 1,144,299 1,223,886 Series FI 725,885 86,765 Series FN 642,500 429,332 Series I 176 180 Series G 21,304 43,856 Series U 34 N/A Series ETF - 18,000 3,598,820 2,841,158

Redemption of redeemable units Series A (11,245,052) (6,540,830) Series AI (1,852,423) (535,800) Series AN (2,632,096) (2,385,180) Series F (21,556,699) (27,623,574) Series FI (18,025,873) (614,371) Series FN (6,653,236) (5,645,592) Series I - - Series G (3,296) (1,375,956) Series U - N/A Series ETF (1,499,944) (2,506,364) (63,468,619) (47,227,667) Net increase (decrease) from redeemable units transactions 18,021,067 12,611,963

Net increase (decrease) in net assets attributable to holders of redeemable units 22,182,627 6,752,563

Series A 28,805,038 33,856,860 Series AI 7,814,492 4,622,962 Series AN 7,253,855 5,732,043 Series F 79,517,362 83,253,439 Series FI 21,275,560 6,243,654 Series FN 27,271,369 19,403,769 Series I 5,937 5,544 Series G 893,330 783,431 Series U 106,443 N/A Series ETF 7,528,663 4,387,720 Net assets attributable to holders of redeemable units at end of year. 180,472,049 158,289,422

The accompanying notes are an integral part of these financial statements.

22 EXEMPLAR INVESTMENT GRADE FUND

Statements of Cash Flows For the years ended December 31, 2019 2018 $ $

Cash flows from (used in) operating activities Increase (decrease) in net assets attributable to holders of redeemable units 10,187,606 (880,738) Adjustment for: Unrealized foreign exchange (gain) loss on cash and cash equivalents 2,145 (9,450) Net realized (gain) loss on investments and derivatives (659,375) 3,399,440 Net change in unrealized (appreciation) depreciation in value of investments and derivatives (3,784,019) 2,425,559 Purchase of investments(note 1) (518,433,894) (846,227,399) Proceeds on sale of investments 552,965,025 835,944,126 Change in accrued interest receivable (69,883) (175,596) Change in accrued dividends receivable 7,917 34,061 Change in accrued dividends payable 7,500 11,250 Change in other liabilities 26,077 10,688 Change in margin loans (46,455) 246,185 Change in margin deposits 677,855 (3,161,414) Change in classification of short term notes 904,134 - Net cash from (used in) operating activities 41,784,633 (8,383,288)

Cash flows from (used in) financing activities Proceeds from redeemable units issued (note 1) 34,887,243 54,863,661 Redemption of redeemable units (61,110,055) (44,613,671) Distributions paid to holders of redeemable units, net of reinvested distributions (2,427,228) (2,137,504) Net cash from (used in) financing activities (28,650,040) 8,112,486

Net Increase (decrease) in cash and cash equivalents 13,134,593 (270,802)

Cash and cash equivalents at beginning of the year 973,970 1,235,322 Unrealized foreign exchange gain (loss) on cash and cash equivalents (2,145) 9,450 Cash and cash equivalents at end of the year 14,106,418 973,970

Supplemental information: Interest received* 7,821,616 6,033,528 Dividends received, net of withholding tax* 163,717 471,098 Interest paid* 16,578 7,526 Dividends paid* - 11,250 *Included as part of cash flows from operating activities

The accompanying notes are an integral part of these financial statements.

23 EXEMPLAR INVESTMENT GRADE FUND Schedule of Investment Portfolio – As at December 31, 2019

Equities - Long - 1.7% No. of Average Fair Security Name Currency Shares/Units Cost ($) Value ($) Equities - 1.7% Bank of Montreal, Preferred, Class 'B', Series '25', Variable Rate, Perpetual CAD 9,800 211,363 237,650 Bank of Nova Scotia, Preferred, Series '32', Variable Rate, Convertible, Perpetual CAD 92,500 2,102,551 2,283,825 Enbridge Inc., Preferred, Series 'B', Variable Rate, Perpetual CAD 15,200 278,883 222,680 Enbridge Inc., Preferred, Series 'L', Variable Rate, Perpetual USD 13,086 371,326 322,864 2,964,123 3,067,019 Fixed Income - Long - 88.0% Maturity Coupon Par Average Fair Security Name Date Rate (%) Currency Value ($) Cost ($) Value ($) Corporate Bonds - 88.0% Anheuser-Busch InBev Finance Inc., Callable 01-25-23 3.38 CAD 8,969,000 9,072,406 9,218,781 Artis REIT, Series 'B', Floating Rate 02-07-20 3.04 CAD 3,000,000 3,003,949 3,001,500 AT&T Inc. 11-25-20 3.83 CAD 1,618,000 1,723,776 1,640,768 AT&T Inc., Callable 05-25-24 2.85 CAD 8,581,000 8,251,308 8,607,263 Bank of Montreal, Variable Rate, Callable 10-05-28 4.34 USD 5,000,000 6,571,707 6,854,925 Bell Canada, Callable 09-11-23 4.70 CAD 7,000,000 7,525,700 7,508,050 Brookfield Property Finance ULC 10-19-21 4.12 CAD 2,477,000 2,521,621 2,544,720 Bruce Power L.P. 06-23-21 2.84 CAD 4,628,000 4,724,815 4,667,326 Choice Properties L.P., Series '9', Callable 09-20-21 3.60 CAD 814,000 833,177 828,761 Coast Capital Savings Credit Union, Floating Rate 02-28-20 2.62 CAD 3,000,000 2,999,850 2,999,100 Enbridge Inc., Variable Rate, Callable 09-27-77 5.38 CAD 4,857,000 4,805,505 4,873,208 Ford Credit Canada Co., Floating Rate 09-21-20 2.88 CAD 12,465,000 12,422,860 12,472,604 Ford Credit Canada Co., Floating Rate 01-10-22 5.00 CAD 1,143,000 1,179,587 1,179,576 Gibson Energy Inc., Callable 07-15-24 5.25 CAD 9,873,000 10,477,820 10,428,126 Goldman Sachs Group Inc. (The), Variable Rate, Callable 04-26-23 2.43 CAD 14,647,000 14,460,091 14,631,573 HSBC Holdings PLC 12-05-23 3.20 CAD 5,000,000 5,128,750 5,092,948 Inter Pipeline Ltd., Series '19-B', Variable Rate, Callable 11-19-79 6.63 CAD 3,604,000 3,606,252 3,637,961 Laurentian Bank of Canada, Floating Rate 12-13-21 2.71 USD 5,977,000 7,877,985 7,777,111 Merrill Lynch & Co. Inc., Variable Rate, Callable 05-30-22 2.89 CAD 18,018,000 18,002,057 18,019,802 Molson Coors International L.P., Callable 07-15-23 2.84 CAD 6,825,000 6,529,347 6,831,063 Molson Coors International L.P., Series '2', Callable 09-18-20 2.75 CAD 950,000 955,450 952,512 Morgan Stanley, Floating Rate, Callable* 10-15-21 2.35 CAD 10,239,000 10,224,396 10,254,461 National Bank of Canada 07-12-24 2.55 CAD 2,965,000 2,987,504 2,968,816 Sysco Canada Inc., Callable 04-25-25 3.65 CAD 7,217,000 7,522,063 7,514,654 TELUS Corp., Series 'CO', Callable 04-05-21 3.20 CAD 2,000,000 2,030,960 2,023,234 VW Credit Canada Inc., Floating Rate* 11-13-20 2.60 CAD 2,300,000 2,300,132 2,306,854 157,739,068 158,835,697 Federal Bonds - 0.0% Government of Canada* 09-01-23 2.00 CAD 2,000 2,036 2,022 Government of Canada* 12-01-48 2.75 CAD 1,000 1,267 1,223 3,303 3,245 157,742,371 158,838,942 Commissions (1,887) Total Investments - 89.7% 160,704,607 161,905,961 Derivatives (see schedule of derivative instruments) - 0.7% 1,172,073 Cash and Other Net Assets (Liabilities) - 9.6% 17,394,015 Net Assets Attributable to Holders of Redeemable Units - 100.0% 180,472,049

* Denotes all or part of securities on loan

24 EXEMPLAR INVESTMENT GRADE FUND Schedule of Investment Portfolio – As at December 31, 2019

Schedule of Derivative Instruments Futures Contracts - Long - 0.1% Contract Expiry No. of Notional Unrealized Security Name Size Date Currency Contracts Value ($) Gain/(Loss) ($) Currency Futures - 0.1% Canadian Currency Futures 1,000 03-17-20 USD 160 16,015,796 199,457 199,457 Futures Contracts - Short - 0.3% Contract Expiry No. of Notional Unrealized Security Name Size Date Currency Contracts Value ($) Gain/(Loss) ($) Bond Futures - 0.3% Canada 5 Year Bond Futures 1,000 03-20-20 CAD (127) (15,276,830) 123,190 Canada 10 Year Bond Futures 1,000 03-20-20 CAD (122) (16,764,020) 313,540 US 5 Year Treasury Notes Futures 1,000 03-31-20 USD (36) (5,544,727) 20,087 456,817 Swaps - 0.3% Notional Average Unrealized Security Name Currency Value ($) Cost ($) Gain/(Loss) ($) 3-Month CDOR, 3/1/2022, 1.905% Interest Rate Swaps CAD 5,000,000 - 8,374 3-Month CDOR, 3/1/2022, 1.8475% Interest Rate Swaps CAD 5,000,000 - 14,468 3-Month CDOR, 3/1/2021, 2.505% Interest Rate Swaps CAD 7,500,000 (22,051) (44,519) 3-Month CDOR, 9/27/2021, 0.9091% Interest Rate Swaps CAD 4,681,000 - 87,167 3-Month CDOR, 9/1/2021, 1.3225% Interest Rate Swaps CAD 28,050,000 49,655 306,372 3-Month CDOR, 8/23/2022, 1.855% Interest Rate Swaps CAD 9,550,000 - 37,511 3-Month CDOR, 9/1/2020, 2.23% Interest Rate Swaps CAD 22,500,000 - (34,316) TRS R Bond Basket P CDOR, 3/11/2020, 1M+25BPS Total Return Swap CAD 46,381,561 - 5,566 TRS R Preferred Basket P CDOR, 3/11/2020, 1M Total Return Swap CAD 50,468,950 - 158,977 27,604 539,600 Forward Currency Contracts - (0.0%)

Purchased Sold Credit Contract Maturity Unrealized Counterparty Currency Notional Value ($) Currency Notional Value ($) Rating Rate ($) Date Gain/(Loss) ($) BNY Mellon USD 684,000 CAD (909,441) A1 0.75211 01-06-20 (21,247) BNY Mellon USD 82,000 CAD (109,033) A1 0.752065 01-06-20 (2,554) Total forward currency contracts (23,801)

Total derivative instruments at fair value $1,172,073

25 EXEMPLAR INVESTMENT GRADE FUND NOTES TO THE AUDITED FINANCIAL STATEMENTS – FUND SPECIFIC INFORMATION For the years ended December 31, 2019 and 2018

The investment objective of the Exemplar Investment Grade Fund (the “Fund”) is to generate income and capital preservation by investing in a diversified portfolio of primarily North American investment grade corporate bonds.

RISK MANAGEMENT

The Fund’s overall risk management program seeks to maximize the returns derived for the level of risk to which the Fund is exposed and seeks to minimize potential adverse effects on the Fund's financial performance. All investments present a risk of loss of capital. The maximum loss of capital on long equity, options, interest rate swaps, credit default swaps and debt securities is limited to the fair value of those positions. The maximum loss on equities, options and debt sold short can be unlimited and the maximum loss on futures contracts is the notional contract value of those positions.

The management of these risks is carried out by the Manager and Portfolio Sub-Advisor in accordance with the Fund’s Declaration of Trust.

The Fund's use of leverage and borrowings can increase the Fund's exposure to these risks, which in turn can also increase the potential returns the Fund can achieve. The Portfolio Sub-Advisor uses leverage against assets with satisfactory liquidity characteristics in order to increase return on capital subject to market conditions.

A general discussion of financial risk management for the Exemplar Funds appears as Note 4: FINANCIAL INSTRUMENTS – RISK MANAGEMENT.

Credit Risk

The analysis below summarizes the credit quality of the Fund's debt portfolio at December 31, 2019 and 2018.

Percentage of total debt securities Credit Rating* December 31, 2019 December 31, 2018 % % AAA - 0.7 AA - - A 31.8 23.0 BBB 56.5 68.1 Below BBB 11.7 - Not Rated - 8.2 Total 100.0 100.0 * Credit ratings are obtained from Standard & Poor's, Moody's and / or Dominion Bond Rating Service.

The Fund measures credit risk and expected credit losses using probability of default, exposure at default and loss given default. Management consider both historical analysis and forward looking information in determining any expected credit loss. At December 31, 2019 and 2018, all amounts due from brokers, cash and cash equivalents and margin deposits are held with counterparties with a credit rating of A3 or higher. Management consider the probability of default and the counterparties have a strong capacity to meet their contractual obligations in the near term. As a result, no loss allowance has been recognized based on 12 month expected credit losses as any such impairment would be wholly insignificant to the Fund.

The Fund is exposed to counterparty credit risk on swaps, and futures contracts. The counterparties to the Fund’s swaps are Bank of America and BMO Capital Markets which have credit ratings as rated by Moody’s bond rating services of A2 and Aa2, respectively (2018 A3 and Aa2, respectively). Futures contracts are exchange traded. Cash collateral has been provided to Bank of America. in accordance with terms of derivative transaction agreements and is presented as ‘Margin deposits’ in the Statements of Financial Position.

26 EXEMPLAR INVESTMENT GRADE FUND NOTES TO THE AUDITED FINANCIAL STATEMENTS – FUND SPECIFIC INFORMATION For the years ended December 31, 2019 and 2018

The Fund is exposed to counterparty credit risk on cash, margin deposits and other receivable balances. The Fund’s broker and custodial services are provided by CIBC Mellon Trust Company which has a credit rating as rated by Moody's bond rating services of A1 (2018 A1).

The Fund may participate in securities lending up to a maximum of 50% of the aggregate net asset value of the Fund, excluding the collateral held in respect to such loans, and is exposed to counterparty risk on all such loans, if any. The credit risk related to the securities lending program is limited as the Fund holds a minimum collateral equal to 102% of the fair value of the loaned securities. The collateral and loaned securities are marked to market on each valuation date. All counterparties have a credit rating by Moody’s bond rating services of not less than Aa3.

Liquidity Risk

From time to time, the Fund may use margin borrowings in one or more of its brokerage accounts. For the year ended December 31, 2019, the minimum margin borrowings used was $nil and the maximum margin borrowings used was $974,275 (2018: min: $nil, max: $862,973).

Market Risk

(a) Currency Risk

The table below indicates the Fund’s exposure to USD as at December 31, 2019 and 2018 in Canadian dollar terms. The table also illustrates the potential impact on the net assets attributable to holders of redeemable units if the Canadian dollar had strengthened or weakened by 10% in relation to USD, with all other variables held constant. Non-monetary items include non-financial options. Monetary items include future contracts, forward currency contracts, options on derivatives, bonds, cash, margin deposit, swaps and other current receivables and payables.

December 31, 2019 Impact on net assets attributable to holders of Exposure redeemable units Monetary Non-Monetary Total Monetary Non-Monetary Total Currency $ $ $ $ $ $ United States Dollar - Long 18,374,023 322,864 18,696,887 1,837,402 32,286 1,869,688 United States Dollar - Short (772,733) - (772,733) (77,273) - (77,273) Euro Currency - Long 11 - 11 1 - 1 Euro Currency - Short (23,567) - (23,567) (2,357) - (2,357) Total 17,577,734 322,864 17,900,598 1,757,773 32,286 1,790,059 % of net assets attributable to holders of redeemable units 9.7% 0.2% 9.9% 1.0% 0.0% 1.0%

27 EXEMPLAR INVESTMENT GRADE FUND NOTES TO THE AUDITED FINANCIAL STATEMENTS – FUND SPECIFIC INFORMATION For the years ended December 31, 2019 and 2018

December 31, 2018 Impact on net assets attributable to holders of Exposure redeemable units Monetary Non-Monetary Total Monetary Non-Monetary Total Currency $ $ $ $ $ $ United States Dollar - Long 14,263,938 176,457 14,440,395 1,426,394 17,646 1,444,040 United States Dollar - Short (1,164,456) - (1,164,456) (116,446) - (116,446) Total 13,099,482 176,457 13,275,939 1,309,948 17,646 1,327,594 % of net assets attributable to holders of redeemable units 8.3% 0.1% 8.4% 0.8% 0.0% 0.8%

(b) Interest Rate Risk

The table below summarizes the Fund's exposure to interest rate risk as at December 31, 2019 and 2018. The table also illustrates the potential impact, or sensitivity, on the net assets attributable to holders of redeemable units if the prevailing levels of market interest rates changed by 1.0%, assuming a parallel shift in the yield curve with all other variables held constant.

Total Exposure Term to Maturity December 31, 2019 December 31, 2018 Less than 1 year $ 45,873,338 $ 16,386,546 1-3 years 107,075,991 161,814,835 3-5 years 65,288,642 67,451,897 Greater than 5 years (14,703,606) (18,533,376) Total $ 203,534,365 $ 227,119,902 Sensitivity: Total $ sensitivity to net assets attributable to holders of redeemable units +/- $ 8,931,281 +/- $ 10,962,635 Total % sensitivity to net assets attributable to holders of redeemable units 4.9% 6.9%

The Fund's policy is to manage price risk through pursuit of a diversified investment program that focuses on investment-grade fixed income securities while utilizing other assets such as options and credit default swaps, to extract relative value and to manage credit exposure.

The Fund engages in short selling activities, wherein it borrows securities and sells them to third parties. Until the Fund covers its short sales, it is exposed to market risk to the extent that subsequent market fluctuations may require purchasing securities sold, not yet purchased, at prices which may be significantly higher than the fair value reflected on the financial statements.

As at December 31, 2019, if the Fund's relevant benchmark index, FTSE TMX Canada Universe Bond Index, had increased or decreased by 5%, with all other variables held constant, the net assets attributable to holders of redeemable units of the Fund would have increased or decreased by $721,888 (2018 $633,157).

Concentration Risk

Concentration risk arises as a result of the concentration of exposures within the same category, whether it is geographical location, product type, industry sector or counterparty type.

The following is a summary of the Fund's concentration risk as of December 31, 2019 and 2018:

December 31, 2019 December 31, 2018 Market Segment Long (%) Short (%) Long (%) Short (%) Corporate Bonds 88.0 - 94.0 - Derivatives 0.8 (0.1) 1.1 (0.9) Equities 1.7 - 1.9 - Federal Bonds 0.0 - 0.6 - Totals 90.5 (0.1) 97.6 (0.9)

28 EXEMPLAR INVESTMENT GRADE FUND NOTES TO THE AUDITED FINANCIAL STATEMENTS – FUND SPECIFIC INFORMATION For the years ended December 31, 2019 and 2018

FAIR VALUE MEASUREMENT

A general discussion of fair value measurement for the Exemplar Funds appears as Note 5: FINANCIAL INSTRUMENTS – FAIR VALUE MEASUREMENT.

The following table illustrates the classification of the Fund's assets and liabilities measured at fair value within the fair value hierarchy as at December 31, 2019 and 2018:

December 31, 2019 Level 1 Level 2 Level 3 Total $ $ $ $ Financial assets Equities 3,067,019 - - 3,067,019 Fixed income - 158,838,942 - 158,838,942 Derivatives 962,646 312,063 - 1,274,709 4,029,665 159,151,005 - 163,180,670

Financial liabilities Derivatives (78,835) (23,801) - (102,636) (78,835) (23,801) - (102,636) Total 3,950,830 159,127,204 - 163,078,034

December 31, 2018 Level 1 Level 2 Level 3 Total $ $ $ $ Financial assets Equities 3,020,281 - - 3,020,281 Fixed income - 149,877,211 - 149,877,211 Derivatives - 1,819,309 - 1,819,309 3,020,281 151,696,520 - 154,716,801

Financial liabilities Derivatives (1,339,612) (81,584) - (1,421,196) (1,339,612) (81,584) - (1,421,196) Total 1,680,669 151,614,936 - 153,295,605

All fair value measurements above are recurring. Fair values are classified as Level 1 when the related security or derivative is actively traded and a quoted price is available. If an instrument classified as Level 1 subsequently ceases to be actively traded, it is transferred out of Level 1. In such cases, instruments are reclassified into Level 2, unless the measurement of its fair value requires the use of significant unobservable inputs, in which case it would be classified as Level 3.

The Manager is responsible for performing the fair value measurements included in the financial statements of the Fund, including Level 3 measurements if any. The Manager obtains pricing from a third party pricing vendor which is monitored and reviewed daily by the finance department. In addition, at each financial reporting date, the Manager reviews and approves all Level 3 fair value measurements, if applicable.

a) Equities and Funds

The Fund's equity positions and investments in funds are classified as Level 1 as the securities are actively traded on a recognized exchange and a quoted price is available.

b) Bonds

29 EXEMPLAR INVESTMENT GRADE FUND NOTES TO THE AUDITED FINANCIAL STATEMENTS – FUND SPECIFIC INFORMATION For the years ended December 31, 2019 and 2018

c) Derivatives

Derivative assets and liabilities consist of futures contracts, options, interest rate swaps, credit default swaps and forward currency contracts. Long and short futures contracts and options are exchange traded and are classified as Level 1 as they are actively traded on a recognized exchange and a quoted price is available. Interest rate swaps are valued using indicative bid/ask prices from third party broker dealers while credit default swaps are valued based upon quotations from independent security pricing sources. The inputs that are significant to valuation are generally observable and therefore both interest rate swaps and credit default swaps have been classified as Level 2. Forward currency contracts are valued based primarily on the contract notional amount and the difference between the contract rate and the forward market rate for the same currency, adjusted for counterparty risk. Forward currency contracts are classified as Level 2.

As at December 31, 2019 and 2018, the Fund did not hold any Level 3 financial instruments. There were no transfers between levels 1, 2 and 3 during the years ending December 31, 2019 and 2018.

30 EXEMPLAR PERFORMANCE FUND

Statements of Financial Position As at December 31, December 31, 2019 2018

ASSETS Current assets Financial assets at fair value through profit and loss: Investments $33,943,904 $25,188,661 Warrants - 2,514 Cash and cash equivalents 4,570,810 14,299,461 Margin deposits 2,156,467 2,229,511 Accrued dividends receivable 35,617 38,064 Accrued interest receivable 3,160 - Receivable for securities sold 4,187 - Receivable for redeemable units issued 18,275 5,361 40,732,420 41,763,572

LIABILITIES Current liabilities Financial liabilities at fair value through profit and loss: Investments sold short 1,195,487 969,430 Payable for securities purchased 12,049 - Accrued dividends payable 2,694 692 Payable for redeemable units redeemed 8,235 25,832 Other liabilities (note 10) 85,860 75,753 1,304,325 1,071,707

Net assets attributable to holders of redeemable units $39,428,095 $40,691,865

Net assets attributable to holders of redeemable units Series A $10,541,324 $11,636,659 Series AD $228,499 $198,439 Series F $26,709,421 $25,474,346 Series FD $242,987 $442,948 Series I $6,317 $5,240 Series L $1,606,877 $2,728,131 Series LD $92,670 $206,102

Number of redeemable units outstanding (note 7) Series A 738,046 959,407 Series AD 20,599 20,674 Series F 1,771,440 2,011,556 Series FD 20,418 43,517 Series I 461 461 Series L 123,627 246,284 Series LD 8,284 21,210

Continued on next page

The accompanying notes are an integral part of these financial statements.

31 EXEMPLAR PERFORMANCE FUND

Statements of Financial Position As at December 31, December 31, 2019 2018

Continued from previous page

Net assets attributable to holders of redeemable units per unit Series A $14.28 $12.13 Series AD $11.09 $9.60 Series F $15.08 $12.66 Series FD $11.90 $10.18 Series I $13.72 $11.38 Series L $13.00 $11.08 Series LD $11.19 $9.72

Approved on behalf of the Board of Directors of Arrow Capital Management Inc., the Manager of the Fund:

“James L. McGovern” “Robert W. Maxwell”

James L. McGovern, Director Robert W. Maxwell, Director

The accompanying notes are an integral part of these financial statements.

32 EXEMPLAR PERFORMANCE FUND

Statements of Comprehensive Income (Loss) For the years ended December 31, 2019 2018 $ $

INCOME Net gains (losses) on investments and derivatives: Interest for distribution purposes 20,732 10,026 Dividend income 370,545 535,397 Dividend expense on short sales (31,151) (15,667) Securities lending income (net) (note 9) 50,559 41,482 Net realized gain (loss) on investments and derivatives 3,279,955 503,695 Net change in unrealized appreciation (depreciation) in value of investments and derivatives 4,514,196 (3,415,491) Net gains (losses) on investments and derivatives 8,204,836 (2,340,558)

Other income items: Interest on cash 31,813 42,812 Foreign exchange gain (loss) 100,861 89,662 Net change in unrealized foreign exchange gain (loss) (438,604) 385,763 Total net income (loss) 7,898,906 (1,822,321)

EXPENSES Management fees (note 10) 548,803 628,200 Performance fees (note 10) 8,256 188 Interest expense - 1,361 Unitholder reporting fees 192,244 202,923 Audit fees 21,099 21,236 Legal fees 10,140 6,947 Independent Review Committee fees 6,206 6,187 Custodial fees 5,971 6,819 Security borrowing expenses 19,260 7,136 Commissions and other portfolio transaction costs (note 11) 21,626 47,847 Withholding tax expense 13,302 21,554 Harmonized sales tax 90,617 100,023 Total expenses 937,524 1,050,421

Increase (decrease) in net assets attributable to holders of redeemable units 6,961,382 (2,872,742)

Increase (decrease) in net assets attributable to holders of redeemable units Series A 1,912,481 (890,921) Series AD 35,281 (15,175) Series F 4,543,936 (1,699,253) Series FD 63,165 (27,444) Series I 1,077 (261) Series L 375,759 (222,572) Series LD 29,683 (17,116)

Increase (decrease) in net assets attributable to holders of redeemable units per unit (note 12) Series A 2.28 (0.89) Series AD 1.70 (0.65) Series F 2.45 (0.87) Series FD 2.31 (0.63) Series I 2.34 (0.57) Series L 2.23 (0.75) Series LD 1.84 (0.62)

The accompanying notes are an integral part of these financial statements.

33 EXEMPLAR PERFORMANCE FUND

Statements of Changes in Net Assets Attributable to Holders of Redeemable Units For the years ended December 31, 2019 2018 $ $

Net assets attributable to holders of redeemable units at beginning of year Series A 11,636,659 13,102,869 Series AD 198,439 261,332 Series F 25,474,346 22,712,803 Series FD 442,948 486,644 Series I 5,240 5,501 Series L 2,728,131 3,696,761 Series LD 206,102 472,175

40,691,865 40,738,085

6,961,382 (2,872,742) Distributions to holders of redeemable units From return of capital Series A - - Series AD (4,299) (4,681) Series F - - Series FD (5,275) (9,458) Series I - - Series L - - Series LD (3,251) (5,056) Total distributions to holders of redeemable units (12,825) (19,195)

Redeemable units transactions Proceeds from redeemable units issued Series A 902,114 1,979,247 Series AD 6,728 72,848 Series F 6,856,321 9,677,714 Series FD - - Series I - - Series L 63,754 49,352 Series LD - 15,500 7,828,917 11,794,661 Continued on next page.

The accompanying notes are an integral part of these financial statements.

34 EXEMPLAR PERFORMANCE FUND

Statements of Changes in Net Assets Attributable to Holders of Redeemable Units For the years ended December 31, 2019 2018 $ $ Continued from previous page.

Reinvestments of distributions to holders of redeemable units Series A - - Series AD 3,346 3,728 Series F - - Series FD 1,358 1,807 Series I - - Series L - - Series LD 2,552 2,799 7,256 8,334

Redemption of redeemable units Series A (3,909,930) (2,554,536) Series AD (10,996) (119,613) Series F (10,165,182) (5,216,918) Series FD (259,209) (8,601) Series I - - Series L (1,560,767) (795,410) Series LD (142,416) (262,200) (16,048,500) (8,957,278)

Net increase (decrease) from redeemable units transactions (8,212,327) 2,845,717

Net increase (decrease) in net assets attributable to holders of redeemable units (1,263,770) (46,220)

Series A 10,541,324 11,636,659 Series AD 228,499 198,439 Series F 26,709,421 25,474,346 Series FD 242,987 442,948 Series I 6,317 5,240 Series L 1,606,877 2,728,131 Series LD 92,670 206,102 Net assets attributable to holders of redeemable units at end of year 39,428,095 40,691,865

The accompanying notes are an integral part of these financial statements.

35 EXEMPLAR PERFORMANCE FUND

Statements of Cash Flows For the years ended December 31, 2019 2018 $ $

Cash flows from (used in) operating activities Increase (decrease) in net assets attributable to holders of redeemable units 6,961,382 (2,872,742) Adjustment for: Unrealized foreign exchange (gain) loss on cash and cash equivalents 398,046 (353,152) Net realized (gain) loss on investments and derivatives (3,279,955) (503,695) Net change in unrealized (appreciation) depreciation in value of investments and derivatives (4,514,196) 3,415,491 Purchase of investments (14,821,107) (22,736,780) Proceeds on sale of investments 14,096,452 31,200,826 Change in accrued interest receivable (3,160) - Change in accrued dividends receivable 2,447 19,588 Change in accrued dividends payable 2,002 677 Change in other liabilities 10,107 (9,660) Change in margin deposits 73,044 (587,886) Net cash from (used in) operating activities (1,074,938) 7,572,667

Cash flows from (used in) financing activities Proceeds from redeemable units issued 7,235,720 10,773,482 Redemption of redeemable units (15,485,817) (7,914,477) Distributions paid to holders of redeemable units, net of reinvested distributions (5,570) (10,861) Net cash from (used in) financing activities (8,255,667) 2,848,144

Net Increase (decrease) in cash and cash equivalents (9,330,605) 10,420,811

Cash and cash equivalents at beginning of the year 14,299,461 3,525,498 Unrealized foreign exchange gain (loss) on cash and cash equivalents (398,046) 353,152 Cash and cash equivalents at end of the year 4,570,810 14,299,461

Supplemental information: Interest received* 49,385 52,838 Dividends received, net of withholding tax* 359,690 533,431 Interest paid* - 1,361 Dividends paid* 29,149 14,990 *Included as part of cash flows from operating activities

The accompanying notes are an integral part of these financial statements.

36 EXEMPLAR PERFORMANCE FUND Schedule of Investment Portfolio – As at December 31, 2019

Equities - Long - 69.1%

No. of Average Fair

Security Name Currency Shares/Units Cost ($) Value ($)

Communication Services - 0.7% AT&T Inc. USD 150 7,287 7,612 Facebook Inc., Class 'A' USD 40 10,391 10,661 Rogers Communications Inc., Class 'B' CAD 3,160 219,884 203,757 Roku Inc.* USD 100 17,482 17,388 TELUS Corp. CAD 460 23,065 23,129 Walt Disney Co. (The) USD 40 7,313 7,512 285,422 270,059

Consumer Discretionary - 3.0% Alibaba Group Holding Ltd., ADR USD 50 13,533 13,771 Amazon.com Inc. USD 60 143,618 143,971 Dollar Tree Inc. USD 920 124,159 112,358 Nike Inc., Class 'B' USD 40 5,169 5,262 Papa John's International Inc.* USD 180 11,739 14,761 Park Lawn Corp. CAD 29,200 567,559 855,268 Sony Corp., ADR USD 230 14,957 20,309 880,734 1,165,700

Consumer Staples - 2.4% Alimentation Couche-Tard Inc., Class 'B' CAD 6,940 233,210 285,997 Constellation Brands Inc., Class 'A' USD 110 25,795 27,104 Empire Co. Ltd., Class 'A' CAD 330 9,048 10,052 Jamieson Wellness Inc. CAD 630 16,297 16,223 Maple Leaf Foods Inc. CAD 910 25,695 23,551 Metro Inc. CAD 300 14,651 16,077 Mondelez International Inc., Class 'A' USD 100 7,116 7,152 Tyson Foods Inc., Class 'A' USD 3,840 330,749 453,965 Village Farms International Inc.* CAD 8,000 64,342 64,560 Walgreens Boots Alliance Inc. USD 330 25,612 25,266 752,515 929,947

Energy - 8.0% Cenovus Energy Inc. CAD 4,220 49,752 55,704 Computer Modelling Group Ltd.* CAD 25,800 232,761 212,076 Enerflex Ltd. CAD 15,260 264,600 186,630 Enerplus Corp. CAD 15,000 217,908 138,750 Freehold Royalties Ltd.* CAD 5,500 83,352 40,095 Gibson Energy Inc. CAD 1,780 37,091 47,330 Inter Pipeline Ltd.* CAD 610 14,266 13,749 Parex Resources Inc. CAD 32,880 549,905 794,052 Parkland Fuel Corp. CAD 770 35,263 36,737 Suncor Energy Inc. CAD 9,800 452,055 417,088 TC Energy Corp. CAD 11,540 615,154 798,106 Tidewater Midstream and Infrastructure Ltd. CAD 149,800 211,881 175,266 Vermilion Energy Inc. CAD 10,700 427,863 227,161 3,191,851 3,142,744

Financials - 2.8% Bank of Montreal CAD 340 33,348 34,218 Brookfield Asset Management Inc., Class 'A' CAD 3,770 203,640 282,863 Burford Capital Ltd. GBP 8,700 146,466 106,547 E*TRADE Financial Corp. USD 6,800 459,542 400,623 JPMorgan Chase & Co. USD 300 42,267 54,305 S&P Global Inc. USD 620 166,625 219,833 TMX Group Ltd. CAD 60 4,692 6,747 1,056,580 1,105,136

37 EXEMPLAR PERFORMANCE FUND Schedule of Investment Portfolio – As at December 31, 2019

Health Care - 2.9% Alcon Inc.* USD 120 9,276 8,815 Knight Therapeutics Inc. CAD 15,600 129,959 118,248 Zoetis Inc. USD 6,000 491,113 1,031,179 630,348 1,158,242

Industrials - 19.5% AG Growth International Inc. CAD 13,810 729,083 641,336 Air Canada CAD 2,220 107,883 107,692 Airbus SE, ADR USD 445 19,443 21,236 Boeing Co. (The) USD 280 138,119 118,444 Boyd Group Income Fund CAD 19,950 3,968,055 4,029,900 CAE Inc. CAD 13,700 236,559 471,006 Canadian Pacific Railway Ltd. CAD 3,270 762,527 1,082,468 Cargojet Inc. CAD 890 71,435 91,964 Dirtt Environmental Solutions Ltd.* CAD 3,000 14,656 12,750 Lockheed Martin Corp. USD 110 50,924 55,619 Morneau Shepell Inc. CAD 12,100 213,160 408,859 Raytheon Co. USD 120 31,665 34,241 Toromont Industries Ltd. CAD 5,000 184,404 352,950 United Technologies Corp. USD 240 43,971 46,673 Waste Connections Inc. CAD 1,190 100,574 140,361 WSP Global Inc.* CAD 840 56,368 74,483 6,728,826 7,689,982

Information Technology - 17.3% Adobe Inc. USD 1,410 389,314 603,867 Constellation Software Inc. CAD 390 316,271 491,852 Descartes Systems Group Inc. (The) CAD 18,100 650,789 1,004,550 Euronet Worldwide Inc. USD 2,330 275,170 476,717 Fidelity National Information Services Inc. USD 240 38,257 43,348 Keysight Technologies Inc. USD 370 39,784 49,310 Kinaxis Inc. CAD 4,000 169,612 400,080 Lightspeed POS Inc. CAD 540 8,640 19,478 MasterCard Inc., Class 'A' USD 1,210 296,002 469,158 Micron Technology Inc. USD 30 2,151 2,095 Microsoft Corp. USD 1,640 212,889 335,841 Palo Alto Networks Inc. USD 640 195,057 192,185 PayPal Holdings Inc. USD 1,590 141,552 223,338 salesforce.com Inc. USD 30 4,404 6,336 Shopify Inc., Class 'A'* USD 3,050 744,256 1,574,646 Square Inc., Class 'A' USD 1,000 41,441 81,237 Visa Inc., Class 'A'* USD 3,320 448,581 810,072 Zebra Technologies Corp., Class 'A' USD 80 19,768 26,536 3,993,938 6,810,646

Materials - 3.5% Agnico Eagle Mines Ltd. CAD 3,600 205,373 287,928 Barrick Gold Corp. CAD 1,520 34,446 36,662 Equinox Gold Corp.* CAD 17,080 94,567 170,629 First Quantum Minerals Ltd. CAD 200 2,638 2,634 Franco-Nevada Corp. CAD 780 100,731 104,590 IPL Plastics Inc.* CAD 4,200 56,700 33,096 K92 Mining Inc. CAD 400 1,050 1,152 Kirkland Lake Gold Ltd. CAD 9,870 107,767 564,959 Lithium Americas Corp.* CAD 11,120 75,381 46,259 Lundin Mining Corp. CAD 800 5,405 6,208 Neo Performance Materials Inc. CAD 950 17,029 11,733 Nutrien Ltd. CAD 750 52,586 46,628 Rio Tinto PLC, ADR* USD 230 17,194 17,729 SilverCrest Metals Inc. CAD 7,000 50,960 61,390 Solaris Resources Inc. CAD 4,060 - - 821,827 1,391,597

38 EXEMPLAR PERFORMANCE FUND Schedule of Investment Portfolio – As at December 31, 2019

Real Estate - 3.7% StorageVault Canada Inc. CAD 395,800 336,430 1,468,418 336,430 1,468,418

Utilities - 5.3% Algonquin Power & Utilities Corp.* CAD 540 9,915 9,920 American Water Works Co. Inc. USD 30 4,187 4,786 Boralex Inc., Class 'A' CAD 170 4,165 4,158 Brookfield Infrastructure Partners L.P. USD 11,900 461,120 772,483 Brookfield Infrastructure Partners L.P. CAD 12,600 587,952 817,236 Fortis Inc. CAD 130 6,745 7,004 Northland Power Inc. CAD 18,130 427,320 493,136 Superior Plus Corp. CAD 160 1,907 2,010 TransAlta Corp. CAD 100 946 928 1,504,257 2,111,661 20,182,728 27,244,132 Equities - Short - (0.8%) No. of Average Fair Security Name Currency Shares/Units Cost ($) Value ($) Consumer Discretionary - (0.2%) Dorel Industries Inc., Class 'B' CAD (300) (7,603) (1,794) Hanesbrands Inc. USD (30) (718) (578) Tesla Motors Inc. USD (110) (36,322) (59,754) (44,643) (62,126)

Consumer Staples - (0.1%) Premium Brands Holdings Corp. CAD (320) (26,468) (29,107) (26,468) (29,107)

Financials - (0.3%) Alaris Royalty Corp. CAD (3,120) (61,032) (68,422) Bank of Nova Scotia CAD (240) (17,162) (17,604) Laurentian Bank of Canada CAD (990) (42,513) (43,986) (120,707) (130,012)

Industrials - (0.1%) Rocky Mountain Dealerships Inc. CAD (900) (7,016) (5,796) Rollins Inc. USD (1,030) (47,303) (44,352) Stantec Inc. CAD (120) (3,885) (4,404) (58,204) (54,552)

Materials - (0.0%) Centerra Gold Inc. CAD (130) (1,360) (1,343) (1,360) (1,343)

Real Estate - (0.1%) Altus Group Ltd. CAD (880) (23,461) (33,405) Brookfield Property Partners L.P. CAD (60) (1,431) (1,424) (24,892) (34,829)

(276,274) (311,969)

39 EXEMPLAR PERFORMANCE FUND Schedule of Investment Portfolio – As at December 31, 2019

Funds - Long - 16.3% No. of Average Fair Security Name Currency Shares Cost ($) Value ($) Arrow Global Advantage Alternative Class, Series ETF** CAD 190,007 3,800,000 3,815,515 BMO Equal Weight Banks Index ETF CAD 660 19,891 19,338 Consumer Staples Select Sector SPDR Fund USD 2,900 207,437 237,170 Health Care Select Sector SPDR Fund* USD 350 43,318 46,295 Invesco QQQ Trust, Series '1' USD 170 45,464 46,934 iShares 20+ Year Treasury Bond ETF* USD 2,800 451,779 492,597 iShares S&P/TSX Capped Energy Index ETF* CAD 38,200 454,129 356,597 iShares S&P/TSX Global Gold Index ETF* CAD 1,290 15,457 21,014 iShares Silver Trust* USD 510 9,992 11,047 iShares TIPS Bond ETF USD 840 129,714 127,152 iShares U.S. Aerospace & Defense ETF USD 190 57,779 54,793 SPDR FTSE International Government Inflation-Protected Bond ETF USD 120 8,611 8,588 SPDR Gold Shares* USD 3,470 562,020 643,903 Technology Select Sector SPDR Fund USD 410 40,038 48,806 Utilities Select Sector SPDR Fund* USD 500 35,311 41,956 VanEck Vectors Semiconductor ETF* USD 440 76,982 80,796 Vanguard REIT ETF USD 3,240 352,844 390,396 6,310,766 6,442,897

Funds - Short - (2.2%) No. of Average Fair Security Name Currency Shares Cost ($) Value ($) iShares iBoxx High Yield Corporate Bond ETF USD (740) (82,370) (84,504) iShares Russell 2000 ETF USD (410) (83,862) (88,204) iShares Russell 2000 Growth ETF USD (960) (242,670) (267,048) iShares S&P/TSX 60 Index ETF CAD (5,780) (133,719) (147,737) SPDR Bloomberg Barclays High Yield Bond ETF USD (230) (33,103) (32,716) SPDR S&P 500 ETF Trust USD (630) (231,062) (263,309) (806,786) (883,518)

Fixed Income - Long - 0.7% Maturity Coupon Par Average Fair Security Name Date Rate (%) Currency Value Cost ($) Value ($) Corporate Bonds - 0.7% North American Construction Group Ltd., Convertible 03-31-26 5.00 CAD 250,000 248,000 256,875 248,000 256,875 Commissions (11,061) Total Investments - 83.1% 25,647,373 32,748,417 Cash and Other Net Assets (Liabilities) - 16.9% 6,679,678 Net Assets Attributable to Holders of Redeemable Units - 100.0% 39,428,095

*Denotes all or part of securities on loan ** Fund is managed by Arrow Capital Management Inc.

40 EXEMPLAR PERFORMANCE FUND NOTES TO THE AUDITED FINANCIAL STATEMENTS – FUND SPECIFIC INFORMATION For the years ended December 31, 2019 and 2018

The investment objective of the Exemplar Performance Fund the (”Fund”) is to achieve capital appreciation over both short and long term horizons primarily through the selection and management of shares of Canadian equity securities.

RISK MANAGEMENT

The Fund’s overall risk management program seeks to maximize the returns derived for the level of risk to which the Fund is exposed and seeks to minimize potential adverse effects on the Fund's financial performance. All investments present a risk of loss of capital. The maximum loss of capital on long equity and debt securities is limited to the fair value of those positions. The maximum loss on equities and debt sold short can be unlimited.

The management of these risks is carried out by the Manager in accordance with the Fund’s Declaration of Trust.

A general discussion of financial risk management for the Exemplar Funds appears as Note 4: FINANCIAL INSTRUMENTS – RISK MANAGEMENT.

Credit Risk

The analysis below summarizes the credit quality of the Fund's debt portfolio at December 31, 2019 and 2018.

Percentage of total debt securities Credit Rating* December 31, 2019 December 31, 2018 % % Not Rated 100.0% - Total - - * Credit ratings are obtained from Standard & Poor's, Moody's and / or Dominion Bond Rating Service.

The Fund is exposed to counterparty credit risk on margin on deposit, cash held at the broker and receivables for securities sold. The Fund’s brokerage agreement requires cash collateral up to 150% of the fair value of securities sold short. The Fund's prime brokerage services are provided by BMO Nesbitt Burns which has a credit rating of Aa2, (2018 Aa2) as rated by Moody's bond rating services. Cash collateral has been provided to BMO Nesbitt Burns in accordance with terms of derivative transaction agreements and is presented as ‘Margin deposits’ in the Statements of Financial Position.

The Fund is exposed to counterparty credit risk on cash and other receivable balances. The Fund’s broker and custodial services are provided by CIBC Mellon Trust Company which has a credit rating as rated by Moody's bond rating services of A1, (2018 A1).

The Fund is exposed to credit risk on cash deposits held at CIBC Mellon Trust Company which has a credit rating as rated by Moody’s bond rating services of A1, (2018 A1).

41 EXEMPLAR PERFORMANCE FUND NOTES TO THE AUDITED FINANCIAL STATEMENTS – FUND SPECIFIC INFORMATION For the years ended December 31, 2019 and 2018

Liquidity Risk

Market Risk

(a) Currency Risk

The table below indicates the Fund’s exposure to foreign currencies as at December 31, 2019 and 2018 in Canadian dollar terms. The table also illustrates the potential impact on the net assets attributable to holders of redeemable units if the Canadian dollar had strengthened or weakened by 10% in relation to the other currencies, with all other variables held constant. Non-monetary items include equities and funds. Monetary items include fixed income, cash, margin deposit, forward contracts, options on derivatives and other current receivables and payables.

December 31, 2019 Impact on net assets attributable to holders of Exposure redeemable units Monetary Non-Monetary Total Monetary Non-Monetary Total Currency $ $ $ $ $ $ United States Dollar - Long 4,702,921 10,778,625 15,481,546 470,292 1,077,863 1,548,155 United States Dollar - Short (7,128) (841,750) (848,878) (713) (84,175) (84,888) British Pound - Long 384,889 106,547 491,436 38,489 10,655 49,144 Total 5,080,682 10,043,422 15,124,104 508,068 1,004,343 1,512,411 % of net assets attributable to holders of redeemable units 12.9% 25.5% 38.4% 1.3% 2.5% 3.8%

December 31, 2018 Impact on net assets attributable to holders of Exposure redeemable units Monetary Non-Monetary Total Monetary Non-Monetary Total Currency $ $ $ $ $ $ United States Dollar - Long 10,301,447 7,621,049 17,922,496 1,030,145 762,105 1,792,250 United States Dollar - Short - (716,935) (716,935) - (71,694) (71,694) British Pound - Long - 1,095,000 1,095,000 - 109,500 109,500 British Pound - Short (267) - (267) (27) - (27) Total 10,301,180 7,999,114 18,300,294 1,030,118 799,911 1,830,029 % of net assets attributable to holders of redeemable units 25.3% 19.7% 45.0% 2.5% 2.0% 4.5%

(b) Interest Rate Risk

As at December 31, 2019 and 2018, the Fund did not hold any interest-bearing securities, and therefore was not subject to significant interest rate risk.

Total Exposure Term to Maturity December 31, 2019 December 31, 2018 Less than 1 year $ - $ - 1-3 years - - 3-5 years - - Greater than 5 years 256,875 - Total $ 256,875 $ - Sensitivity: Total $ sensitivity to net assets attributable to holders of redeemable units +/- $ 13,557 +/- $ - Total % sensitivity to net assets attributable to holders of redeemable units 0.00 -

42 EXEMPLAR PERFORMANCE FUND NOTES TO THE AUDITED FINANCIAL STATEMENTS – FUND SPECIFIC INFORMATION For the years ended December 31, 2019 and 2018

To achieve the investment objective, the Fund will invest predominantly in large and mid capitalization Canadian companies. Generally, no more than 20% of the Fund is expected to be invested outside of this investment focus. The Fund may also invest in bonds and other debt instruments if warranted by financial conditions. The Fund will not specialize in any one industry other than to concentrate investments in those industries that offer the best opportunities for exceptional returns at each stage of the economic and market cycle.

The Fund may follow a more concentrated investment approach and, from time to time, over weight certain geographic regions and industry sectors when deemed appropriate by the Manager. This may result in the Fund’s portfolio weightings being substantially different from the weightings of the S&P/TSX Composite Total Return Index (or its successor index).

The Fund may hold cash or invest in short term securities for the purpose of preserving capital and/or maintaining liquidity, based upon the Manager’s ongoing evaluation of current and anticipated economic and market conditions. The Fund may also invest in foreign securities of the same type and characteristics as described above.

The Fund engages in short selling activities, wherein it borrows securities and sells them to third parties. Until the Fund covers its short sales, it is exposed to market risk to the extent that subsequent market fluctuations may require purchasing securities sold short at prices which may be significantly higher than the fair value reflected on the financial statements.

As at December 31, 2019, the impact on net assets of the Fund due to a 5% change in market prices of equity and fund securities is $1,624,577 (all other variables held constant) (2018 $1,211,087).

Concentration Risk

Concentration risk arises as a result of the concentration of exposures within the same category, whether it is geographical location, product type, industry sector or counterparty type.

The following is a summary of the Fund's concentration risk as of December 31, 2019 and 2018:

December 31, 2019 December 31, 2018 Market Segment Long (%) Short (%) Long (%) Short (%) Communication Services 0.7 - 0.8 - Consumer Discretionary 3.0 (0.2) 3.4 (0.3) Consumer Staples 2.4 (0.1) 3.4 - Corporate Bonds 0.7 - - - Energy 8.0 - 6.0 - Financials 2.8 (0.3) 5.1 (0.2) Funds 16.3 (2.2) 3.8 (1.7) Health Care 2.9 - 3.4 - Industrials 19.5 (0.1) 14.0 (0.2) Information Technology 17.3 - 10.4 - Materials 3.5 - 5.0 (0.0) Real Estate 3.7 (0.1) 2.7 - Utilities 5.3 - 3.9 - Totals 86.1 (3.0) 61.9 (2.4)

FAIR VALUE MEASUREMENT

A general discussion of fair value measurement for the Exemplar Funds appears as Note 5: FINANCIAL INSTRUMENTS – FAIR VALUE MEASUREMENT.

43 EXEMPLAR PERFORMANCE FUND NOTES TO THE AUDITED FINANCIAL STATEMENTS – FUND SPECIFIC INFORMATION For the years ended December 31, 2019 and 2018

The following table illustrates the classification of the Fund's assets and liabilities measured at fair value within the fair value hierarchy as at December 31, 2019 and 2018:

December 31, 2019 Level 1 Level 2 Level 3 Total $ $ $ $ Financial assets Equities 27,244,132 - - 27,244,132 Fixed income - 256,875 - 256,875 Funds 6,442,897 - - 6,442,897 33,687,029 256,875 - 33,943,904

Financial liabilities Equities sold short (311,969) - - (311,969) Funds (883,518) - - (883,518) (1,195,487) - - (1,195,487) Total 32,491,542 256,875 - 32,748,417

December 31, 2018 Level 1 Level 2 Level 3 Total $ $ $ $ Financial assets Equities 23,649,687 - - 23,649,687 Funds 1,538,974 - - 1,538,974 Derivatives 2,514 - - 2,514 25,191,175 - - 25,191,175

Financial liabilities Equities sold short (282,105) - - (282,105) Funds (687,325) - - (687,325) (969,430) - - (969,430) Total 24,221,745 - - 24,221,745

The Manager is responsible for performing the fair value measurements included in the financial statements of the Fund, including Level 3 measurements if any. The Manager obtains pricing from a third party pricing vendor which is monitored and reviewed daily by the Manager. In addition, at each financial reporting date, the Manager reviews and approves all Level 3 fair value measurements, if applicable. a) Equities and Funds

The Fund's equity positions and investments in funds (long and short) are all classified as Level 1 as each security is actively traded on a recognized exchange and a quoted price is available. b) Bonds

The Fund's bond holdings are comprised of Canadian corporate bonds. Bond pricing is obtained from bid and ask prices provided by independent security pricing services or recognized investment dealers. Bond prices may be derived by using models which include inputs such as interest rate curves, credit spreads and volatilities. The inputs that are significant to valuation are generally observable and therefore the Fund's bonds have been classified as Level 2. c) Derivatives

Derivatives consist of warrants and forward currency contracts. Warrants are valued using models and valuation techniques commonly used in the industry, including inputs such as underlying stock price, restrictions on exercise and days to expiry. Exchange traded

44 EXEMPLAR PERFORMANCE FUND NOTES TO THE AUDITED FINANCIAL STATEMENTS – FUND SPECIFIC INFORMATION For the years ended December 31, 2019 and 2018 warrants are classified as Level 1. When the inputs that are significant to valuation are generally observable, the warrants are classified as level 2. Forward currency contracts are valued based primarily on the contract notional amount and the difference between the contract rate and the forward market rate for the same currency, adjusted for counterparty risk. Forward currency contracts are classified as Level 2.

As at December 31, 2019, the Fund did not hold any level 3 financial instruments. There were no transfers between levels 1, 2 and 3 during the years ended December 31, 2019 and 2018.

45 EXEMPLAR FUNDS GENERAL NOTES TO THE AUDITED FINANCIAL STATEMENTS For the years ended December 31, 2019 and 2018

1. THE FUNDS

Exemplar Growth and Income Fund, Exemplar Investment Grade Fund, and Exemplar Performance Fund (collectively the “Funds” and each a “Fund”) are open-ended mutual fund trusts created under the laws of the Province of Ontario pursuant to a declaration of trust dated August 27, 2007 (the “Declaration of Trust”) as amended and restated from time to time.

Arrow Capital Management Inc. (“Arrow”) is the manager (“Manager”) and Trustee of the Funds. The transfer agent and custodian of the Funds are RBC Investor Trust Inc. and CIBC Mellon Trust Company, respectively. The address of the Funds’ registered office is 36 Toronto Street, Suite 750, Toronto, Ontario.

The date of inception and series structure of the Funds are as follows:

Name of the Fund Date of Inception Series Information

Exemplar Growth and Income Fund March 16, 2015 Series A, AN, F, FN, I, L and LN units. July 5, 2018 ETF units

Exemplar Investment Grade Fund June 27, 2014 Series A, AI, F and I units November 12, 2014 Series AN, FI and FN units June 29, 2015 Series U and G units November 17, 2017 ETF units.

Exemplar Performance Fund March 6, 2014 Series A, F, I and L units. March 16, 2015 Series AD, FD and LD units

Arrow is the portfolio advisor of the Funds. Arrow has engaged East Coast Fund Management Inc. as a sub-advisor “Portfolio Sub- advisor” for the Exemplar Investment Grade Fund.

The Statements of Financial Position of each of the Funds are as at December 31, 2019 and December 31, 2018. The Statements of Comprehensive Income (Loss), Statements of Changes in Net Assets Attributable to Holders of Redeemable Units and Statements of Cash Flows for each Fund are for the years ended December 31, 2019 and 2018, except for Funds or series of a Fund established during either period, in which case the information for that Fund or applicable series is provided for the period from inception of the Fund or start date of the series of the Fund to the period ended of the applicable year. The Schedule of Investment Portfolio for each Fund is as at December 31, 2019.

On December 1, 2017, Exemplar Investment Grade Fund listed Series ETF units on the Toronto Stock Exchange (the “TSX”) under the symbol CORP. On July 27, 2018, Exemplar Growth and Income Fund listed Series ETF on the TSX under the symbol EGIF.

These financial statements were authorized for issue by the Manager on March 24, 2020.

Fund Mergers

Effective March 27, 2019, Exemplar Leaders Fund and Exemplar Tactical Corporate Bond Fund (the “Terminating Funds”) merged into Exemplar Growth and Income Fund and Exemplar Investment Grade Fund, respectively (the “Continuing Funds”). Unitholders of the Terminating Funds received units of the Continuing Funds in exchange for their units of the Terminating Funds on a tax-deferred basis. The merger was effected by transferring the net assets of the Terminating Fund in exchange for securities of the Fund at fair market value. The merger has been accounted for as an acquisition of the Terminating Fund. Following the merger, the Terminating Fund was terminated. Arrow paid the expenses incurred to effect the merger.

Details relating to the mergers are as follows:

46 EXEMPLAR FUNDS GENERAL NOTES TO THE AUDITED FINANCIAL STATEMENTS For the years ended December 31, 2019 and 2018

Conversion Ratios of Exemplar Leaders Fund (Terminating Fund)

Net Assets Units issued by Series A Series F acquired by Exemplar Growth Exemplar Growth and Income Fund and Income Fund (Continuing Fund) $

Series AN 20,928,240 1,915,631 3.6515 Series FN 8,305,556 742,277 3.6627 Total 29,233,796 2,657,908

Conversion Ratios of Exemplar Tactical Corporate Bond Fund (Terminating Fund)

Net Assets Units issued by Series A Series Series Series Series Series Series Series Series acquired by Exemplar AI F FI AN FN L U G Exemplar Investment Grade Investment Grade Fund Fund (Continuing Fund) $

Series AI 4,186,994 480,920 0.9759 0.8944 0.9779 Series FI 29,547,427 3,300,848 0.9878 0.9058 Series AN 3,335,046 327,534 0.9752 Series FN 6,867,488 666,281 0.9723 Series U 74,368 5,550 0.9383 Series G 84,076 6,204 0.9535 Total 44,095,399 4,787,337

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting polices applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the periods presented.

2.1 Basis of Accounting

These audited financial statements (“financial statements”) have been prepared in accordance with International Financial Reporting Standards (“IFRS”). These financial statements have been prepared under the historical cost convention, except for financial assets and financial liabilities that have been measured at fair value.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires the Manager to exercise its judgement in its process of applying the Fund’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in Note 3: CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS.

2.2 Foreign Currency Translation

The Funds’ functional and presentation currency is the Canadian dollar.

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates that transactions occur. Foreign currency assets and liabilities denominated in a foreign currency are translated into the functional currency

47 EXEMPLAR FUNDS GENERAL NOTES TO THE AUDITED FINANCIAL STATEMENTS For the years ended December 31, 2019 and 2018 using the exchange rate prevailing at the measurement date. Foreign exchange gains and losses relating to cash are presented as ‘Foreign exchange gain (loss)’ and those relating to other investments and derivatives are presented within ‘Net realized gain (loss) on investments and derivatives’ and ‘Net change in unrealized appreciation (depreciation) in value of investments and derivatives’ in the Statements of Comprehensive Income (Loss).

2.3 Financial Assets and Financial Liabilities at Fair Value Through Profit or Loss

Financial instruments include financial assets and liabilities such as debt and equity securities, open-ended investment funds and derivatives. The Fund classify and measure financial instruments in accordance with IFRS 9 Financial Instruments (“IFRS 9”). a) Classification

Assets

The Funds classify their investments based on both the Funds business model for managing those financial assets and the contractual cash flow characteristics of the financial assets. The portfolio of financial assets is managed and performance is evaluated on a fair value basis. The Funds are primarily focused on fair value information and use that information to assess the assets’ performance and to make decisions. The Funds have not taken the option to irrevocably designate any equity securities as fair value through other comprehensive income. The contractual cash flows of the Fund’s debt securities are solely principal and interest, however, these securities are neither held for the purpose of collecting contractual cash flows nor held both for collecting contractual cash flows and sale. The collection of contractual cash flows is only incidental to achieving the Funds business model’s objective. Consequently, all investments are measured at Fair Value Through Profit or Loss (“FVTPL”).

Liabilities

The Funds may make short sales in which a borrowed security is sold in anticipation of a decline in the market value of that security, or it may use short sales for various arbitrage transactions. Short sales are consequently classified as financial liabilities at fair value through profit or loss. Derivative contracts that have a negative fair value are presented as liabilities at FVTPL.

As such, the Funds classify all of their investment portfolio as financial assets or liabilities as FVTPL.

The Funds policy requires the Manager and the Board of Directors to evaluate the information about these financial assets and liabilities on a fair value basis together with other related financial information. b) Recognition, derecognition and measurement

Regular purchases and sales of financial assets are recognized in the Statements of Financial Position at their trade date – the date on which the Funds commit to purchase or sell the investment. Financial assets and financial liabilities at FVTPL are initially recognized at fair value. Transaction costs are expensed as incurred.

All financial instruments are recognized in the Statements of Financial Position when the Funds become a party to the contractual requirements of the instrument.

Financial assets are derecognized when the right to receive cash flows from the instrument has expired or the Fund has transferred substantially all risks and rewards of ownership. Financial liabilities are derecognized when the obligation is discharged, cancelled or expires.

Subsequent to initial recognition, all financial assets and financial liabilities at FVTPL are measured at fair value. Gains and losses arising from changes in the fair value of the financial assets or financial liabilities at FVTPL category are recognized in the Statements of Comprehensive Income (Loss) in ‘Net change in unrealized appreciation (depreciation) in value of investments and derivatives’.

The Funds’ accounting policies for measuring the fair value of their investments and derivatives are the same as those used in measuring its net asset value ("NAV") for transactions with shareholders. There were no differences between the net assets attributable to holders of redeemable shares used for reporting purposes under IFRS and that used for transactions with unitholders as at December 31, 2019 or December 31, 2018.

48 EXEMPLAR FUNDS GENERAL NOTES TO THE AUDITED FINANCIAL STATEMENTS For the years ended December 31, 2019 and 2018

Realized gains and losses on sale of investments and unrealized appreciation or depreciation in investments are determined on an average cost basis excluding commissions and other portfolio transaction costs, which are separately reported in the Statements of Comprehensive Income (Loss) in ‘Commissions and other portfolio transaction costs’. Realized gains and losses on securities sold short and unrealized appreciation or depreciation on securities sold short are calculated with reference to the average proceeds of the related securities. Average cost does not include amortization of premiums or discounts on fixed income securities. Interest for distribution purposes shown on the Statements of Comprehensive Income (Loss) represents the coupon interest received by a Fund accounted for on an accrual basis. The Funds do not amortize premiums or discounts received on the purchase of fixed income securities.

Dividend income and dividend expense on short sales is recognized in the Statements of Comprehensive Income (Loss) on the ex- dividend date. Distributions received from investment trust units are recorded as dividends, interest for distribution purposes, net realized gains (losses) on sale of investments or a return of capital, based on the best information available to the Manager. Due to the nature of those investments, actual allocations could vary from this information. c) Financial Instruments - Fair Value Measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value of financial assets and liabilities traded in active markets is based on quoted market prices at the close of trading on the reporting date. The Funds use the last traded market price for securities where the last traded price falls within the bid-ask spread. In circumstances where the last traded price is not within the bid-ask spread, the Manager determines the point within the bid-ask spread that is most representative of fair value based on the specific facts and circumstances. The fair value of bonds is determined using mid-market pricing derived from bid and ask prices provided by independent security pricing services or recognized investment dealers. The fair value of futures contracts is based on the settlement price assigned by the exchange. Gains and losses arising from changes in the fair value of financial assets or liabilities are presented in the Statements of Comprehensive Income (Loss). The Funds' policy is to recognize transfers into and out of the fair value hierarchy levels at the beginning of each period.

The fair value of financial assets and liabilities that are not traded in an active market is determined using valuation techniques. The Funds may use a variety of methods and make assumptions that are based on market conditions existing at each reporting date. Valuation techniques include the use of comparable recent arm’s length transactions, reference to other instruments that are substantially the same and other commonly used methods by market participants which make the maximum use of observable inputs. d) Options

An option is a contractual arrangement under which the seller (writer) grants the purchaser (holder) the right, but not the obligation, either to buy (a call option) or sell (a put option) at or by a set date or during a set period, a specific amount of securities or a financial instrument at a predetermined price. When a Fund purchases an option, an amount equal to fair value which is based on the premium paid is recorded as an asset. When a Fund writes an option, an amount equal to fair value which is based on the premium received by the Fund is recorded as a liability. Options held by a Fund are exchange-traded. Subsequent to initial recognition, changes in fair value, the difference between the premium paid or received, and fair value, are presented in ‘Net change in unrealized appreciation (depreciation) in value of investments and derivatives’ in the Statements of Comprehensive Income (Loss). When options are closed, the difference between the premium and the amount paid or received, net of brokerage commissions, or the full amount of the premium if the option expires worthless, is recognized as a gain or loss and is presented in the Statements of Comprehensive Income (Loss) within ‘Net realized gain (loss) on investments and derivatives’. e) Forward Currency Contracts

The Funds may enter into forward currency contracts for purposes of minimizing currency exposure or to establish an exposure to a particular currency. The value of forward currency contracts entered into by a Fund is recorded as the difference between the contract rate and the current forward rates at the measurement date, applied to the contract's notional amount and adjusted for counterparty risk. The change in the fair value of forward currency contracts is included in ‘Net change in unrealized appreciation (depreciation) in

49 EXEMPLAR FUNDS GENERAL NOTES TO THE AUDITED FINANCIAL STATEMENTS For the years ended December 31, 2019 and 2018 value of investments and derivatives’ in the Statements of Comprehensive Income (Loss). Upon closing of a contract, the gain or loss is included in ‘Net realized gain (loss) on investments and derivatives’ in the Statements of Comprehensive Income (Loss). f) Futures Contracts

The Funds may purchase or sell exchange traded futures contracts. Futures contracts are contractual obligations to buy or sell financial instruments or commodities on a future date at a specified price established in an organized market. Subsequent to initial recognition, changes in fair value are presented in ‘Net change in unrealized appreciation (depreciation) in value of investments and derivatives’ in the Statements of Comprehensive Income (Loss). When futures contracts are closed out, the gain or loss is presented in the Statements of Comprehensive Income (Loss) within ‘Net realized gain (loss) on investments and derivatives’. g) Credit Default Swap Contracts

A credit default swap contract is an agreement to transfer credit risk from one party, a buyer of protection, to another party, a seller of protection. The Fund as a seller of protection would be required to pay a notional or other agreed upon value to the buyer of protection in the event of a default by a third party. In return, the Fund would receive from the counterparty a periodic stream of payments over the term of the contract provided that no event of default occurs. If no default occurs, the Fund would keep the stream of payments and would have no payment obligations.

The Fund as a buyer of protection would receive a notional or other agreed upon value from the seller of protection in the event of a default by a third party. In return, the Fund would be required to pay to the counterparty a periodic stream of payments over the term of the contract provided that no event of default occurs.

Premiums received or paid for entering into a credit default swap are included in the Statements of Financial Position as either an asset or liability. Credit default swap contracts are fair valued on each valuation day based upon quotations from independent security pricing sources. The change in the difference between the premium and the fair value is included in ‘Net change in unrealized appreciation (depreciation) in value of investments and derivatives’ in the Statements of Comprehensive Income (Loss). Upon closing or expiry of a contract, the gain or loss is included in ‘Net realized gain (loss) on investments and derivatives’ in the Statements of Comprehensive Income (Loss). h) Interest Rate Swap Contracts

An interest swap contract is a contractual agreement entered into between the Fund and a counterparty under which each party agrees to exchange periodic fixed or variable payments, based upon a stated notional amount, over the stated life of the agreement. The net differential paid or received is recognized over the life of the agreement as a realized gain or loss on investments. Interest rate swap contracts are fair valued on each valuation day using indicative bid/ask prices from third party broker dealers. The change in fair value is included in ‘Net change in unrealized appreciation (depreciation) in value of investments and derivatives’ in the Statements of Comprehensive Income (Loss). Upon closing or expiry of a contract, the gain or loss is included in ‘Net realized gain (loss) on investments and derivatives’ in the Statements of Comprehensive Income (Loss).

2.4 Offsetting Financial Statements

Financial assets and liabilities are offset and the net amount reported in the Statements of Financial Position when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the asset and settle the liability simultaneously. In the normal course of business, the Funds enter into various master netting agreements or similar agreements that do not meet the criteria for offsetting in the Statements of Financial Position but still allow for the related amounts to be set off in certain circumstances, such as bankruptcy or termination of the contracts.

2.5 Due From and To Brokers

Amounts due from and to brokers represent receivables for securities sold and payables for securities purchased that have been contracted for but not yet settled or delivered on the Statements of Financial Position date respectively. The due from brokers balance is held for collection. These amounts are recognized initially at fair value and subsequently measured at amortized cost. Amounts due from brokers are presented in “Receivables for securities sold” and amounts due to brokers are presented in “Payable for securities purchased” in the Statements of Financial Position.

50 EXEMPLAR FUNDS GENERAL NOTES TO THE AUDITED FINANCIAL STATEMENTS For the years ended December 31, 2019 and 2018

2.6 Cash and Cash Equivalents

Cash and cash equivalents, which includes cash deposited with financial institutions and short-term investments that are readily convertible to cash, are subject to an insignificant risk of changes in value, and are used by the Arrow Funds in the management of short-term commitments. Cash and cash equivalents are measured at amortized cost which closely approximates their fair value. Bank overdrafts are shown within borrowings in current liabilities in the Statements of Financial Position.

2.7 Margin Deposits

Cash collateral provided by each Fund to brokers for securities sold short and counterparties to derivative transactions is identified in that Fund’s Statements of Financial Position as ‘Margin Deposits’.

2.8 Margin Loans

Margin loans represents cash amounts borrowed under a margin agreement with a Fund's broker and is payable upon demand (if applicable) which is identified in the Fund’s Statements of Financial Position as ‘Margin Loans’

2.9 Investments in Structured Entities

The Funds may invest in underlying investment vehicles ("Structured Entities") that are managed by their respective Investment Advisors and whose investment objectives may range from achieving short-term to long-term income and capital growth. Structured Entities may use leverage in a manner consistent with their respective objectives and as permitted by their respective governing regulatory authorities. Structured Entities finance their operations by issuing redeemable units which are puttable at the holder’s option and entitles the holder to a proportionate stake in the respective fund’s net assets. The Funds' interest in Structured Entities as at December 31, 2019 and 2018, held the form of redeemable units, which are included at their fair value in the Statements of Financial Position which represents the Funds’ maximum exposure in these Structured Entities. Refer to Note 6. The Funds do not provide, and have not committed to provide, any additional significant financial or other support to the Structured Entities. The change in fair value of each of the Structured Entities during the periods is included in ‘Net change in unrealized appreciation (depreciation) of value of investments and derivatives’ and ‘Net gains (losses) on investments and derivatives’ in the Statements of Comprehensive Income (Loss).

2.10 Series ETF Units and Unit Transactions

The Manager, on behalf of the Series ETF, has entered into a designated broker agreement with one or more designated brokers pursuant to which the designated broker has agreed to perform certain duties relating to the Series ETF including, without limitation: (i) to subscribe for a sufficient number of units to satisfy the TSX’s original listing requirements; (II) to subscribe for units on an ongoing basis in connection with any rebalancing event, as applicable, and when cash redemptions of units occur; and (iii) to post a liquid two- way market for the trading of units on the TSX. In accordance with the designated broker agreement, Arrow may from time to time require the designated broker to subscribe for units of the Series ETF for cash.

The number of units issued for subscription orders (the “Prescribed Number of Units”) is determined by Arrow. On any trading day, a designated broker may place a subscription or redemption order for an integral multiple of the Prescribed Number of Units of Series ETF based on the NAV per unit determined on the applicable trading day. A trading day is each day on which the TSX is open for business.

Generally, all orders to purchase Series ETF units must be placed by a designated broker or a dealer. The Fund reserves the right to reject any subscription order placed by a designated broker or dealer in connection with the issuance of Series ETF units. No fees will be payable Series ETF to a designated broker or a dealer in connection with the issuance of units. On the issuance of units, an amount may be charged to a designated broker or a dealer to offset the expenses incurred in issuing units.

For each Prescribed number of Series ETF units issued, a dealer must deliver payment consisting of (1) cash in an amount equal to the aggregate net asset value per unit of the Prescribed Number of Series ETF units next determined following the receipt of the subscription order; (ii) a group of securities or assets representing the constituents of, and their weightings in, the Fund (“Basket of Securities”) or a combination of a Basket of Securities and cash, as determined by us, in an amount sufficient so that the value of the securities and cash received is equal to the aggregate net asset value per unit of the Prescribed Number of ETF Series Units next

51 EXEMPLAR FUNDS GENERAL NOTES TO THE AUDITED FINANCIAL STATEMENTS For the years ended December 31, 2019 and 2018 determined following the receipt of the subscription order; or (iii) securities other than Baskets of Securities or a combination of securities other than Baskets of Securities and cash, as determined by us, in an amount sufficient so that the value of the securities and cash received is equal to the aggregate NAV per unit of the Prescribed Number of Units next determined following the receipt of the subscription order.

2.11 Securities Lending Income

The Funds may enter into securities lending arrangements. These transactions involve the temporary exchange of securities for collateral with a commitment to deliver the same securities at a future date. Income is earned from these transactions in the form of fees paid by the counterparty and, in certain circumstances, interest paid on cash or securities held as collateral. Income earned from these transactions is included in ‘Securities lending income (net)’ in the Statements of Comprehensive Income (Loss).

Securities lending transactions are subject to master netting arrangements and the related offsetting disclosure is presented in Note 9.

2.12 Commissions and Other Portfolio Transaction Costs

Commissions and other portfolio transaction costs are incremental costs that are directly attributable to the acquisition or disposal of an investment, which include fees and commissions paid to agents, advisors, brokers and dealers. Such costs are expensed when incurred.

2.13 Income and Expense Allocation

The net assets of each series of each Fund are computed by calculating the value of that series’ proportionate share of that Fund’s assets less that series’ proportionate share of that Fund’s common liabilities less series specific liabilities, if any. Expenses directly attributable to a series are charged to that series. Other income, expenses and gains/losses are allocated based on a reasonable allocation methodology which will include allocations based on the assets of the Funds or the number of unitholders in the Funds or other methodology the Manager determines is fair.

2.14 Increase (Decrease) in Net Assets Attributable to Holders of Redeemable Units per Unit

The increase (decrease) in net assets attributable to holders of redeemable Units per unit is calculated by dividing the increase (decrease) in net assets attributable to the series divided by the weighted average number of redeemable shares outstanding in that series during the period. Refer to Note 12 for the calculation.

2.15 Classification of Redeemable Units issued by the Funds

The Funds’ redeemable units are multi-series and contain multiple dissimilar contractual obligations and therefore meet the criteria for classification as financial liabilities under IAS 32, Financial Instruments: Presentation. The Funds’ obligation for net assets attributable to unitholders is presented at the redemption amount.

2.16 Impairment Policy

At each reporting date, the Fund shall measure the loss allowance on amounts due from broker at an amount equal to the lifetime expected credit losses if the credit risk has increased significantly since initial recognition. If, at the reporting date, the credit risk has not increased significantly since initial recognition, the Fund shall measure the loss allowance at an amount equal to 12-month expected credit losses.

Significant financial difficulties of the broker, probability that the broker will enter bankruptcy or financial reorganization, and default in payments are all considered indicators that a loss allowance may be required. If the credit risk increases to the point that it is considered to be credit impaired, interest income will be calculated based on the gross carrying amount adjusted for the loss allowance. A significant increase in credit risk is defined by management as any contractual payment which is more than 30 days past due or a counterparty rating which has fallen below BBB/Baa. Any contractual payment which is more than 90 days past due is considered credit impaired.

52 EXEMPLAR FUNDS GENERAL NOTES TO THE AUDITED FINANCIAL STATEMENTS For the years ended December 31, 2019 and 2018

2.17 Mergers

The Funds apply the acquisition method of accounting for Fund mergers. Under this method, one of the Funds in each merger is identified as the acquiring Fund, and is referred to as the Continuing Fund, and the other Fund involved in the merger is referred to as the Terminating Fund. This identification is based on the comparison of the relative net asset values of the Funds as well as consideration of the continuation of such aspects of the Continuing Fund as: investment advisors; investment objectives and practices; type of portfolio securities; and management fees and expenses.

3. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS The preparation of financial statements requires management to use judgment in applying its accounting policies and to make estimates and assumptions about the future. The following discusses the most significant accounting judgments and estimates that the Manager has made in preparing the financial statements:

Use of Estimates

Fair Value measurement of derivatives and securities not quoted in an active market

The Funds may hold financial instruments that are not quoted in active markets, including derivatives. Fair value of such instruments is determined using valuation techniques and may be determined using reputable pricing sources (such as pricing agencies) or indicative prices from market makers. Broker quotes as obtained from the pricing sources may be indicative and not executable or binding. Where no market data is available, a Fund may value positions using its own models, which are usually based on valuation methods and techniques generally recognized as standard within the industry. The models used to determine fair values are validated and periodically reviewed by experienced personnel of the Manager, independent of the party that created them.

Models use observable data, to the extent practicable. However, areas such as credit risk (both own and counterparty), volatilities and correlations require the Manager to make estimates. Changes in assumptions about these factors could affect the reported fair values of financial instruments. The Funds consider observable data to be market data that is readily available, regularly distributed and updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market. Refer to Note 6 for further information about the fair value measurement of the Fund's financial instruments.

As at December 31, 2019, the investments in the Underlying Funds represented 1.5% of net assets attributable to holders of Exemplar Growth and Income Fund (1.5% of Exemplar Investment Grade Fund -- Series ETF) (2018 -- 3.5% of Exemplar Investment Grade Fund -- Series ETF) and 9.7% of net assets attributable to holders of Exemplar Performance Fund (9.7% Arrow Global Advantage Class – Series ETF) (2018 - nil%). The fair values of the Underlying Funds are determined primarily by reference to the latest available net asset value per unit of the Underlying Funds’ units as reported by the respective administrators of the Underlying Funds. The Fund may make adjustments to the values based on considerations such as; liquidity of the Underlying Funds or their underlying investments, the value date of the net asset values provided, any restrictions on redemptions and the basis of accounting. Redemptions can only be made on the redemption dates and subject to the required notice periods specified in the respective offering documents. As a result, the carrying values of the Underlying Funds may not be indicative of the values ultimately realized on redemption. Series I unitholders of the Underlying Funds have the right to redeem any or all of their Series I units effective each business day of each month.

Refer to Note 5 for further information about the fair value measurement of the Fund's financial instruments and to Note 6 for further information about the Fund’s Structured Entities.

Use of Judgments

Classification and Measurement of Investments and Application of the Fair Value Option

In classifying and measuring financial instruments held by the Funds, the Manager is required to make significant judgments in order to determine the most appropriate classification in accordance with IFRS 9 Financial Instruments (“IFRS 9”). The Manager has assessed the Fund’s business model, the manner in which all financial instruments are managed and performance evaluated as a group on a fair value basis, and concluded that FVTPL in accordance with IFRS 9 provides the most appropriate measurement and presentation of the Fund’s financial statements.

53 EXEMPLAR FUNDS GENERAL NOTES TO THE AUDITED FINANCIAL STATEMENTS For the years ended December 31, 2019 and 2018

Assessment as Investment Entity

Entities that meet the definition of an investment entity within IFRS 10 are required to measure their subsidiaries at fair value through profit or loss rather than consolidate them. Each Fund meets the definition of investment entity as it obtains funds from one or more investors for the purpose of providing those investors with professional investment management services and commit to their investors that their business purpose is to invest funds solely for returns from capital appreciation, investment income or both. Each Fund measures and evaluates the performance of substantially all of its investments on a fair value basis.

Determination if Underlying Funds Meet the Structured Entity Definition

The Funds have concluded that their investments in the Underlying Funds are investments in unconsolidated structured entities. This represents a significant judgment by the Funds that is based generally on the fact that the decision making about the Underlying Funds investing activities is not governed by voting rights held by the Funds and other investors.

4. FINANCIAL INSTRUMENTS – RISK MANAGEMENT In the normal course of business, each Fund is exposed to a variety of financial risks: credit risk, liquidity risk and market risk (including currency risk, interest rate risk and price risk), concentration risk and capital risk. Please refer to Notes to the Financial Statements – Fund Specific Information for each Fund’s specific risk disclosure.

Credit Risk

The Funds may be exposed to credit risk, which is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. Where a Fund invests in debt instruments and derivatives, this represents the main concentration of credit risk. The Funds are also exposed to counterparty credit risk on cash, margin deposits and other receivable balances. The Funds may also participate in securities lending and: therefore, be exposed to counterparty risk on all such loans, if any.

All transactions in listed securities are settled or paid for upon delivery using approved brokers. The credit risk related to the associated receivables is considered limited, as delivery of securities sold is only made once the broker has received payment. Payment is made on a purchase once the securities have been received by the broker. The trade will fail if either party fails to meet its obligation. However, there are risks involved in dealing with custodians or prime brokers who settle trades and in rare circumstances, the securities and other assets deposited with the custodian or broker may be exposed to credit risk with regard to such parties. In addition, there may be practical problems or time delays associated with enforcing a Fund's rights to its assets in the case of an insolvency of any such party.

The Funds measure credit risk and expected credit losses using probability of default, exposure at default and loss given default. Management consider both historical analysis and forward looking information in determining any expected credit loss. At December 31, 2019 and December 31, 2018, all amounts due from brokers, cash and cash equivalents and margin deposits are held with counterparties with a credit rating of Aa3 or higher. Management consider the probability of default and the counterparties have a strong capacity to meet their contractual obligations in the near term. As a result, no loss allowance has been recognized based on 12 month expected credit losses as any such impairment would be wholly insignificant to the Fund.

Liquidity Risk

Liquidity risk is the risk that a Fund will encounter difficulty in meeting obligations associated with financial liabilities. Each Fund is exposed to daily cash redemptions and as such, retains sufficient cash to fund anticipated redemptions. Each Fund aims to retain sufficient cash to maintain adequate liquidity including coverage of obligations related to short sales (if applicable) and all current liabilities. In addition, each Fund generally invests in securities that are highly liquid and where there is an observable market price that is quoted by multiple dealers.

Market Risk

The Funds’ investments are subject to market risk which is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk can be further sub-divided into 3 categories: currency risk, interest rate risk and price risk.

54 EXEMPLAR FUNDS GENERAL NOTES TO THE AUDITED FINANCIAL STATEMENTS For the years ended December 31, 2019 and 2018 a) Currency Risk

The Funds invest in financial instruments and enter into transactions that are denominated in currencies other than the Canadian dollar. Consequently, the Funds are exposed to currency risk, which is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Funds may enter into foreign exchange currency contracts to reduce their foreign currency exposure. b) Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. A Fund may hold securities with fixed interest rates that expose that Fund to fair value interest rate risk. c) Price Risk

The Funds are exposed to price risk, which is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk). The Funds’ investments are subject to the risk of changes in the prices of equity securities, bonds and derivatives.

Concentration Risk

Concentration risk arises as a result of the concentration of exposures within the same category, whether it is geographical location, product type, industry sector or counterparty type.

Capital Risk Management

Units issued and outstanding are considered to be the capital of the Funds. The Funds do not have any specific capital requirements on the subscription and redemption of units, other than certain minimum subscription requirements. Unitholders are entitled to require payment of the net asset value per unit of a Fund for all or any of the units of such unitholder by giving written notice to the Manager. The written notice is irrevocable and must be received no later than 4:00 p.m., EST, on the valuation day upon which the units are to be redeemed (a "Redemption Date"). The redeeming unitholder will receive payment in respect of any units surrendered for redemption on or before the 3rd business day immediately following a Redemption Date, subject to the Manager’s right to suspend redemptions in certain circumstances.

5. FINANCIAL INSTRUMENTS – FAIR VALUE MEASUREMENT

Each Fund classifies fair value measurements within a hierarchy which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). Please refer to Notes to the Financial Statements – Fund Specific Information for each Fund’s specific risk disclosure.

The three levels of the fair value hierarchy are:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that a Fund can access at the measurement date,

Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability either directly or indirectly; and

Level 3: Inputs that are unobservable for the asset or liability.

If inputs of different levels are used to measure an asset's or liability's fair value, the classification within the hierarchy is based on the lowest level input that is significant to the fair value measurement.

The Funds may participate in securities lending and; therefore, receive collateral categorized as Level 1 or 2 as defined above. Such collateral is not considered significant to the financial instrument hierarchy of the securities owned by the Funds.

55 EXEMPLAR FUNDS GENERAL NOTES TO THE AUDITED FINANCIAL STATEMENTS For the years ended December 31, 2019 and 2018

6. INVESTMENT IN STRUCTURED ENTITIES

Information related to investments in Structured Entities is as follows:

Exemplar Growth and Income Fund – December 31, 2019

Fair Value of Fund's Net Assets Attributable to Investment in Underlying Holders of Redeemable Ownership of Underlying Fund Units Fund $ % % Exemplar Investment Grade Fund Series ETF 3,563,079 1.53 1.97 Global X Silver Miners ETF 215,429 0.09 0.04 iPath Bloomberg Cocoa Subindex Total Return ETN 76,069 0.03 0.19 iPath Series B Bloomberg Livestock Subindex Total Return ETN 535,613 0.23 1.17 iShares 7-10 Year Treasury Bond ETF 9,303,202 3.99 0.05 iShares Barclays 1-3 Year Treasury Bond Fund 9,121,392 3.92 0.05 iShares Barclays 3-7 Year Treasury Bond Fund 13,879,876 5.96 0.14 iShares Floating Rate Bond ETF 1,919,857 0.82 0.02 iShares iBoxx $ Investment Grade Corporate Bond ETF 3,015,849 1.30 0.01 iShares MBS ETF 2,764,330 1.19 0.01 iShares MSCI United Kingdom ETF 442,806 0.19 0.02 iShares Silver Trust 1,732,785 0.74 0.03 iShares TIPS Bond ETF 5,298,019 2.28 0.03 ProShares UltraPro Short Russell 2000 234,258 0.10 0.38 ProShares UltraShort QQQ 4,119,650 1.77 1.02 Proshares UltraShort S&P 500 3,712,425 1.59 0.36 SPDR Gold Shares 9,463,703 4.06 0.02 Vanguard REIT ETF 2,108,618 0.91 0.01 iShares Barclays 3-7 Year Treasury Bond Fund (302,614) (0.13) (0.00) iShares Floating Rate Bond ETF (11,079,235) (4.76) (0.11) iShares iBoxx $ Investment Grade Corporate Bond ETF (3,338,105) (1.43) (0.01)

Exemplar Growth and Income Fund – December 31, 2018

Fair Value of Fund's Net Assets Attributable to Investment in Underlying Holders of Redeemable Ownership of Underlying Fund Units Fund $ % % BMO Long Federal Bond Index ETF 173,500 0.30 0.06 Exemplar Investment Grade Fund ETF 1,994,752 3.47 1.26 iShares 20+ Year Treasury Bond ETF 1,990,625 3.46 0.02 iShares 7-10 Year Treasury Bond ETF 10,953,546 19.07 0.09 iShares Barclays 1-3 Year Treasury Bond Fund 2,866,508 4.99 0.01 iShares Barclays 3-7 Year Treasury Bond Fund 2,950,088 5.13 0.04 iShares Canadian Government Bond Index ETF 319,050 0.56 0.07 iShares S&P/TSX Global Gold Index ETF 702,000 1.22 0.09 iShares Silver Trust 198,227 0.35 0.00 iShares U.S. Dow Jones Medical Equipment Index 36,825 0.06 0.00 SPDR Gold Shares 827,653 1.44 0.00 SPDR S&P Homebuilders ETF 133,189 0.23 0.02 Utilities Select Sector SPDR Fund 325,109 0.57 0.00 Vanguard REIT ETF 203,604 0.35 0.00 iShares Barclays 3-7 Year Treasury Bond Fund (229,285) -0.40 0.00

56 EXEMPLAR FUNDS GENERAL NOTES TO THE AUDITED FINANCIAL STATEMENTS For the years ended December 31, 2019 and 2018

Exemplar Investment Grade Fund – December 31, 2019

Fair Value of Fund's Net Assets Attributable to Investment in Underlying Holders of Redeemable Ownership of Underlying Fund Units Fund $ % % N/A N/A N/A N/A

Exemplar Investment Grade Fund – December 31, 2018

Fair Value of Fund's Net Assets Attributable to Investment in Underlying Holders of Redeemable Ownership of Underlying Fund Units Fund $ % % N/A N/A N/A N/A

Exemplar Performance Fund – December 31, 2019

Fair Value of Fund's Net Assets Attributable to Investment in Underlying Holders of Redeemable Ownership of Fund Units Underlying Fund $ % % Arrow Global Advantage Alternative Class, Series ETF** 3,815,515 9.68% 4.85 BMO Equal Weight Banks Index ETF 19,338 0.05% 0.00 Consumer Staples Select Sector SPDR Fund 237,170 0.60% 0.00 Health Care Select Sector SPDR Fund* 46,295 0.12% 0.00 Invesco QQQ Trust, Series '1' 46,934 0.12% 0.00 iShares 20+ Year Treasury Bond ETF* 492,597 1.25% 0.00 iShares S&P/TSX Capped Energy Index ETF* 356,597 0.90% 0.05 iShares S&P/TSX Global Gold Index ETF* 21,014 0.05% 0.00 iShares Silver Trust* 11,047 0.03% 0.00 iShares TIPS Bond ETF 127,152 0.32% 0.00 iShares U.S. Aerospace & Defense ETF 54,793 0.14% 0.00 SPDR FTSE International Government Inflation-Protected Bond ETF 8,588 0.02% 0.00 SPDR Gold Shares* 643,903 1.63% 0.00 Technology Select Sector SPDR Fund 48,806 0.12% 0.00 Utilities Select Sector SPDR Fund* 41,956 0.11% 0.00 VanEck Vectors Semiconductor ETF* 80,796 0.20% 0.00 Vanguard REIT ETF 390,396 0.99% 0.00 iShares iBoxx High Yield Corporate Bond ETF (84,504) -0.21% (0.00) iShares Russell 2000 ETF (88,204) -0.22% (0.00) iShares Russell 2000 Growth ETF (267,048) -0.68% (0.00) iShares S&P/TSX 60 Index ETF (147,737) -0.37% (0.00) SPDR Bloomberg Barclays High Yield Bond ETF (32,716) -0.08% (0.00) SPDR S&P 500 ETF Trust (263,309) -0.67% (0.00)

57 EXEMPLAR FUNDS GENERAL NOTES TO THE AUDITED FINANCIAL STATEMENTS For the years ended December 31, 2019 and 2018

Exemplar Performance Fund – December 31, 2018

Fair Value of Net Assets Attributable to Fund's Investment in Holders of Redeemable Ownership of Underlying Underlying Fund Units Fund $ % % Consumer Staples Select Sector SPDR Fund 201,042 0.49 0.00 Health Care Select Sector SPDR Fund 60,233 0.15 0.00 Horizons Medical Marijuana Life Sciences ETF, Class 'A' 14,350 0.04 0.00 iShares 20+ Year Treasury Bond ETF 149,297 0.37 0.00 iShares S&P/TSX Capped Energy Index ETF 321,200 0.79 0.04 SPDR Gold Shares 437,001 1.07 0.00 Utilities Select Sector SPDR Fund 26,009 0.06 0.00 Vanguard REIT ETF 329,842 0.81 0.00 Industrial Select Sector SPDR Fund (105,519) (0.26) (0.00) Invesco QQQ Trust, Series '1' (44,225) (0.11) (0.00) iShares China Large-Cap ETF (3,201) (0.01) (0.00) iShares iBoxx High Yield Corporate Bond ETF (56,466) (0.14) (0.00) iShares MSCI China ETF (8,620) (0.02) (0.00) iShares MSCI Europe Financials ETF (4,628) (0.01) (0.00) iShares MSCI Turkey Investable Market Index Fund (11,338) (0.03) (0.00) iShares Russell 2000 ETF (100,540) (0.25) (0.00) iShares S&P/TSX 60 Index ETF (192,418) (0.47) (0.00) SPDR S&P 500 ETF Trust (102,357) (0.25) (0.00) Technology Select Sector SPDR Fund (2,538) (0.01) (0.00) VanEck Vectors Semiconductor ETF (54,811) (0.13) (0.01) Vanguard FTSE Europe ETF (664) (0.00) (0.00)

7. REDEEMABLE UNITS

During the years ended December 31, 2019 and 2018, the number of units issued, redeemed and outstanding was as follows:

Exemplar Growth and Income Fund - for the period ended December 31, 2019

Redeemable units Redeemable units Redeemable units outstanding at Redeemable units issued on reinvestment Redeemable units issued and outstanding beginning of year issued of distributions redeemed at end of year Series A 2,341,565 4,111,928 115,516 (885,250) 5,683,759 Series AN 530,335 3,818,650 6,616 (556,062) 3,799,539 Series F 1,086,602 5,985,381 93,941 (403,485) 6,762,439 Series FN 1,043,110 3,640,663 47,727 (794,441) 3,937,059 Series I - - - - - Series L 113,348 291,823 6,650 (26,851) 384,970 Series LN 66,088 156,082 - (8,033) 214,137 Series ETF 125,000 575,000 - (350,000) 350,000

58 EXEMPLAR FUNDS GENERAL NOTES TO THE AUDITED FINANCIAL STATEMENTS For the years ended December 31, 2019 and 2018

Exemplar Growth and Income Fund - for the period ended December 31, 2018

Redeemable units Redeemable units Redeemable units outstanding at Redeemable units issued on reinvestment Redeemable units issued and outstanding beginning of year issued of distributions redeemed at end of year Series A 1,017,162 1,696,351 37,244 (409,192) 2,341,565 Series AN 138,077 421,863 8,835 (38,440) 530,335 Series F 219,985 917,034 11,555 (61,972) 1,086,602 Series FN 793,393 412,410 22,541 (185,234) 1,043,110 Series I 102,227 94 1,547 (103,868) - Series L 44,531 73,033 1,360 (5,576) 113,348 Series LN 22,287 46,725 822 (3,746) 66,088 Series ETF - 125,000 - - 125,000

Exemplar Investment Grade Fund - for the period ended December 31, 2019

Redeemable units Redeemable units Redeemable units outstanding at Redeemable units issued on reinvestment Redeemable units issued and outstanding beginning of year issued of distributions redeemed at end of year Series A 3,612,725 486,396 82,372 (1,179,383) 3,002,110 Series AI 537,584 566,208 14,261 (213,521) 904,532 Series AN 577,037 372,171 15,340 (256,696) 707,852 Series F 8,684,027 1,465,760 117,194 (2,206,914) 8,060,067 Series FI 707,025 3,616,988 81,473 (2,020,239) 2,385,247 Series FN 1,931,962 1,270,957 61,931 (639,359) 2,625,491 Series I 533 - 16 - 549 Series G 57,951 7,695 1,584 (246) 66,984 Series U N/A 8,105 3 - 8,108 Series ETF 225,000 225,000 - (75,000) 375,000

Exemplar Investment Grade Fund - for the period ended December 31, 2018

Redeemable units Redeemable units Redeemable units outstanding at Redeemable units issued on reinvestment Redeemable units issued and outstanding beginning of year issued of distributions redeemed at end of year Series A 3,281,116 922,320 87,878 (678,589) 3,612,725 Series AI 500,780 87,939 8,522 (59,657) 537,584 Series AN 515,597 281,335 11,880 (231,775) 577,037 Series F 8,506,130 2,865,693 124,628 (2,812,424) 8,684,027 Series FI 584,286 180,827 9,518 (67,606) 707,025 Series FN 1,545,306 887,756 42,919 (544,019) 1,931,962 Series I 515 - 18 - 533 Series G 137,568 19,952 3,368 (102,937) 57,951 Series ETF 100,000 250,000 - (125,000) 225,000

59 EXEMPLAR FUNDS GENERAL NOTES TO THE AUDITED FINANCIAL STATEMENTS For the years ended December 31, 2019 and 2018

Exemplar Performance Fund - for the period ended December 31, 2019

Redeemable units Redeemable units Redeemable units outstanding at Redeemable units issued on reinvestment Redeemable units issued and outstanding beginning of year issued of distributions redeemed at end of year Series A 959,407 67,624 - (288,985) 738,046 Series AD 20,674 631 313 (1,019) 20,599 Series F 2,011,556 483,683 - (723,799) 1,771,440 Series FD 43,517 - 119 (23,218) 20,418 Series I 461 - - - 461 Series L 246,284 5,277 (127,934) 123,627 Series LD 21,210 - 237 (13,163) 8,284

Exemplar Performance Fund - for the period ended December 31, 2018

Redeemable units Redeemable units Redeemable units outstanding at Redeemable units issued on reinvestment Redeemable units issued and outstanding beginning of year issued of distributions redeemed at end of year Series A 1,004,422 151,020 - (196,035) 959,407 Series AD 24,830 6,849 356 (11,361) 20,674 Series F 1,686,003 710,024 - (384,471) 2,011,556 Series FD 44,102 - 164 (749) 43,517 Series I 461 - - - 461 Series L 309,149 4,153 - (67,018) 246,284 Series LD 44,217 1,484 265 (24,756) 21,210

8. OFFSETTING OF FINANCIAL INSTRUMENTS

In the normal course of business, the Funds enter into various master netting arrangements or other similar agreements that do not meet the criteria for offsetting in the Statements of Financial Position, but still allow for the related amounts to set off in certain circumstances, such as bankruptcy or termination of the contracts. The following tables show financial instruments that may be eligible for offset, if such conditions were to arise, as at December 31, 2019 and 2018. The “Net Amount” column displays what the net impact would be on the Fund’s Statements of Financial Position if all amounts were set off.

Exemplar Growth and Income Fund - December 31, 2019 Related amounts not set-off in the Statement of Financial Position Net amounts Financial presented in the instruments eligible Statement of Financial Gross amounts for offset Financial Position instruments Collateral Net amount $ $ $ $ $ $ Financial assets: Counterparty 1 ------Counterparty 2 1,859,627 - 1,859,627 - - 1,859,627 1,859,627 - 1,859,627 - - 1,859,627 Financial liabilities: Counterparty 1 ------Counterparty 2 ------

60 EXEMPLAR FUNDS GENERAL NOTES TO THE AUDITED FINANCIAL STATEMENTS For the years ended December 31, 2019 and 2018

Exemplar Growth and Income Fund - December 31, 2018 Related amounts not set-off in the Statement of Financial Position Net amounts Financial presented in the instruments eligible Statement of Financial Gross amounts for offset Financial Position instruments Collateral Net amount $ $ $ $ $ $ Financial assets: Counterparty 1 409,901 - 409,901 - - 409,901 Counterparty 2 ------409,901 - 409,901 - - 409,901 Financial liabilities: Counterparty 1 ------Counterparty 2 (75,067) - (75,067) - 1 (75,066) (75,067) - (75,067) - 1 (75,066)

Exemplar Investment Grade Fund - December 31, 2019 Related amounts not set-off in the Statement of Financial Position

Net amounts Financial presented in the instruments eligible Statement of Financial Gross amounts for offset Financial Position instruments Collateral Net amount $ $ $ $ $ $ Financial assets: Counterparty 1 1,110,168 - 1,110,168 (78,835) - 1,031,333 Counterparty 2 - - - - - Counterparty 3 164,543 - 164,543 - - 164,543 1,274,711 - 1,274,711 (78,835) - 1,195,876 Financial liabilities: Counterparty 1 (78,835) - (78,835) 78,835 - - Counterparty 2 (23,801) - (23,801) - 23,801 - Counterparty 3 ------(102,636) - (102,636) 78,835 23,801 -

Exemplar Investment Grade Fund - December 31, 2018 Related amounts not set-off in the Statement of Financial Position Net amounts Financial presented in the instruments eligible Statement of Financial Gross amounts for offset Financial Position instruments Collateral Net amount $ $ $ $ $ $ Financial assets: Counterparty 1 1,311,028 (81,584) 1,229,444 (1,229,444) - - Counterparty 2 26,662.00 - 26,662 - - 26,662 Counterparty 3 476,164.00 - 476,164 - - 476,164 Counterparty 4 5,455 - 5,455 - - 5,455 1,819,309 (81,584) 1,737,725 (1,229,444) - 508,281 Financial liabilities: Counterparty 1 (1,421,196) 81,584 (1,339,612) 1,229,444 110,168 - Counterparty 2 ------Counterparty 3 ------Counterparty 4 ------(1,421,196) 81,584 (1,339,612) 1,229,444 110,168 -

61 EXEMPLAR FUNDS GENERAL NOTES TO THE AUDITED FINANCIAL STATEMENTS For the years ended December 31, 2019 and 2018

Exemplar Performance Fund - December 31, 2019 Related amounts not set-off in the Statement of Financial Position Net amounts Financial presented in the instruments eligible Statement of Financial Gross amounts for offset Financial Position instruments Cash collateral Net amount $ $ $ $ $ $ Financial assets: Counterparty 1 ------Financial liabilities: Counterparty 1 ------

Exemplar Performance Fund - December 31, 2018 Related amounts not set-off in the Statement of Financial Position Net amounts Financial presented in the instruments eligible Statement of Financial Gross amounts for offset Financial Position instruments Collateral Net amount $ $ $ $ $ $ Financial assets: Counterparty 1 ------Financial liabilities: Counterparty 1 ------

9. SECURITIES LENDING

The Funds’ have entered into a security lending program administered by BNY Mellon, in its capacity as Lending Agent. The tables below summarize the securities loaned and collateral held as at December 31, 2019 and 2018 and the security lending income for the periods ended December 31, 2019 and 2018:

As at December 31, 2019

Exemplar Exemplar Exemplar Growth and Investment Performance Income Fund Grade Fund Fund $ $ $ Non-Cash Collateral Coverage Collateral received for securities on loan 59,648,754 819,692 4,761,623 Market value of securities loaned (56,663,841) (780,449) (4,522,334) Collateral in excess of securities loaned 2,984,913 39,243 239,289 Collateral as a percentage of securities loaned 105.3% 105.0% 105.3%

Non-Cash Collateral Exposure CAD 10,872,462 819,692 838,875 USD 48,776,291 - 3,922,748 59,648,754 819,692 4,761,623

62 EXEMPLAR FUNDS GENERAL NOTES TO THE AUDITED FINANCIAL STATEMENTS For the years ended December 31, 2019 and 2018

As at December 31, 2018

Exemplar Exemplar Exemplar Growth and Investment Performance Income Fund Grade Fund Fund $ $ $ Non-Cash Collateral Coverage Collateral received for securities on loan 16,647,536 3,339,449 3,756,568 Market value of securities loaned (15,731,103) (3,177,748) (3,567,865) Collateral in excess of securities loaned 916,433 161,701 188,703 Collateral as a percentage of securities loaned 105.8% 105.1% 105.3%

Non-Cash Collateral Exposure CAD 2,125,085 3,339,449 2,050,393 USD 14,522,451 - 1,706,175 16,647,536 3,339,449 3,756,568

For the year ended December 31, 2019

Exemplar % of gross Exemplar % of gross Exemplar % of gross Growth and security lending Investment security lending Performance security lending Income Fund income Grade Fund income Fund income $ $ $ Income Securities lending income 190,251 100.0% 5,092 100.0% 85,748 100.0% Withholding taxes (14,930) 7.8% (12) 0.2% (1,494) 1.7% BNY Mellon lending agent fees (70,115) 36.9% (2,030) 39.9% (33,695) 39.3% Securities lending income (net) 105,206 55.3% 3,050 59.9% 50,559 59.0%

For the year ended December 31, 2018 % of gross Exemplar security Exemplar % of gross Exemplar % of gross Growth and lending Investment security lending Performance security lending Income Fund income Grade Fund income Fund income $ $ $ Income Securities lending income 90,654 100.0% 2,828 100.0% 71,807 100.0% Withholding taxes (3,951) 4.4% (9) 0.3% (2,681) 3.7% BNY Mellon lending agent fees (34,673) 38.2% (1,127) 39.9% (27,644) 38.5% Securities lending income (net) 52,030 57.4% 1,692 59.8% 41,482 57.8%

10. RELATED PARTY TRANSACTIONS

The Manager is responsible for making decisions relating to the investment of the Funds’ assets and providing key management personnel.

The Exemplar Growth and Income Fund and Exemplar Performance Fund invests in units of other funds managed by Arrow. The number of units owned by the Funds is summarized as follows:

As at December 31, 2019 % of net assets attributable to holders of Fund Held By Fund Invested In Number of units Fair Value ($) redeemable units Exemplar Growth and Income Fund Exemplar Investment Grade Fund - ETF 177,400 3,563,079 1.5 Exemplar Performance Fund Arrow Global Advantage Alternative Class - ETF 190,007 3,815,515 9.7

63 EXEMPLAR FUNDS GENERAL NOTES TO THE AUDITED FINANCIAL STATEMENTS For the years ended December 31, 2019 and 2018

As at December 31, 2018 % of net assets attributable to holders of Fund Held By Fund Invested In Number of units Fair Value ($) redeemable units Exemplar Growth and Income Fund Exemplar Investment Grade Fund - ETF 102,400 1,994,752 3.5

As of December 31, 2019, the number of units owned by the Manager or Directors of the Manager of each Fund is as follows: % of net assets attributable to holders of Number of units Amount ($) redeemable units Exemplar Growth and Income Fund - A 2,043 21,688 0.0% Exemplar Growth and Income Fund - AN 913 10,098 0.0% Exemplar Growth and Income Fund - F 667 7,149 0.0% Exemplar Growth and Income Fund - FN 294,756 3,328,861 1.4% Exemplar Investment Grade Fund - FN 94 973 0.0% Exemplar Investment Grade Fund - I 549 5,937 0.0% Exemplar Investment Grade Fund - U 103 1,346 0.0% Exemplar Performance Fund - F 871 13,135 0.0% Exemplar Performance Fund - I 461 6,317 0.0%

As of December 31, 2018, the number of units owned by the Manager or Directors of the Manager of each Fund is as follows: % of net assets attributable to holders of Number of units Amount ($) redeemable units Exemplar Growth and Income Fund - A 4,096 43,090 0.1% Exemplar Growth and Income Fund - FN 369,982 4,029,099 7.0% Exemplar Growth and Income Fund - ETF 500 10,115 0.0% Exemplar Investment Grade Fund - I 533 5,542 0.0% Exemplar Performance Fund - F 871 11,034 0.0% Exemplar Performance Fund - I 461 5,245 0.0%

Management and Performance Fees

Management fees are calculated and accrued daily and paid monthly and are subject to HST (and any other applicable taxes). The management fee rates are calculated as a % of the net asset value of the Funds as follows:

Fund

Exemplar Growth and Exemplar Investment Exemplar Performance Series Income Fund Grade Fund Fund A 1.80 1.30 2.00 AD n/a n/a 2.00 AI n/a 1.30 n/a AN 1.80 1.30 n/a U n/a n/a n/a F 0.80 0.80 1.00 FD n/a n/a 1.00 FI n/a 0.80 n/a FN 0.80 0.80 n/a G n/a 0.80 n/a L 2.10 n/a 2.30 LD n/a n/a 2.30 LI n/a n/a n/a LN 2.10 n/a n/a M n/a n/a n/a ETF 0.80 0.80 n/a

64 EXEMPLAR FUNDS GENERAL NOTES TO THE AUDITED FINANCIAL STATEMENTS For the years ended December 31, 2019 and 2018

Effective October 01, 2018, the Manager reduced the management fee rates on Exemplar Growth and Income Fund Series A and AN from 2.00% to 1.80%, Series F and FN from 1.00% to 0.80%, Series L and LN from 2.30% to 2.10% and Series ETF from 1.00% to 0.80%. A holder of Series I units of a Fund, if applicable, pays a negotiated management fee directly to Arrow. The management fee in respect of Series I units will be different for each investor, and will not exceed 2.50% per year.

In addition, Exemplar Performance Fund pay the Manager an annual performance fee (the “Performance Fee”), equal to 20% of the amount by which the Funds outperform their respective index. The Performance Fee is calculated and accrued daily and paid annually on a calendar year basis and is subject to HST (and any other applicable taxes). If the performance of a series of the Fund in any year is less than the performance of the index described below (the “Return Deficiency”), then no Performance Fee will be payable in any subsequent year until the performance of the applicable series, on a cumulative basis calculated from the first of such subsequent years, has exceeded the amount of the Return Deficiency.

A Performance Fee will be payable in all circumstances where the performance of the Fund exceeds that of the S&P/TSX Composite Total Return Index, even in circumstances where the overall performance of the Fund has declined in a particular year, but as long as the performance of the Fund is positive since the last date that a performance fee was paid by the Fund. The S&P/TSX Composite Total Return Index is comprised of most of the largest companies on the Toronto Stock Exchange as measured by market capitalization with any distributions reinvested.

If any units of Exemplar Performance Fund are redeemed prior to the end of a calendar year, a performance fee will be payable on the redemption date in respect of each such unit in the same manner as described above, however, the bench mark will be pro-rated. This performance fee is paid to the fund quarterly.

Exemplar Growth and Income Fund does not charge a performance fee directly, although funds it invests in may be charged a performance fee.

Each Fund is responsible for all operating expenses incurred by or on behalf of that Fund. At the discretion of the Manager, certain fees may be absorbed by the Manager. During the years ended December 31, 2019 and 2018 the Manager waived operating expenses as noted in the Statements of Comprehensive Income (Loss).

Accrued management fees and performance fees (excluding HST) included in other liabilities on the Statements of Financial Position are as follows:

December 31, 2019 December 31, 2018 Management Fees Performance Fees Management Fees Performance Fees $ $ $ $ Exemplar Growth and Income Fund 257,321 N/A 57,048 N/A Exemplar Investment Grade Fund 146,598 N/A 127,315 N/A Exemplar Performance Fund 46,248 9,212 48,062 186

Operation and Administration Fees

The Funds pay for all expenses incurred in connection with its operation and administration, including applicable GST, HST and any applicable provincial sales taxes. Such costs and expenses may include, without limitation, the fees and expenses of the members of the IRC appointed under NI 81-107 and NI 81-102, as applicable and expenses related to the compliance of those Canadian Securities Regulations; regulatory fees including participation or other fees payable by the Manager under applicable securities legislation; accounting; audit; valuation; legal; registrar and transfer agency, custodial and safekeeping fees; taxes; brokerage commissions; fees and expenses relating to the implementation of portfolio transactions; interest; shareholder servicing costs; shareholder meeting costs; printing and mailing costs; litigation expenses; amounts paid for damages awarded or as settlements in connection with litigation; lease payments (including prepaid portions thereof); costs of office space, facilities and equipment; costs of financial and other reports and prospectuses that are used in complying with applicable securities legislation; and any new fee that may be introduced by a securities authority or other governmental authority that is calculated based on assets or other criteria of the Funds.

65 EXEMPLAR FUNDS GENERAL NOTES TO THE AUDITED FINANCIAL STATEMENTS For the years ended December 31, 2019 and 2018

The Manager may provide any of these services and is reimbursed all of it costs in providing these services to the Funds which may include but are not limited to personnel costs, office space, insurance and depreciation. The common expense of the Funds and other investment funds managed by Arrow will be allocated among the Funds and other funds, as applicable. The Funds will bear separately any expense item that can be attributed specifically to the Funds. Common expense of the Funds and other funds will be allocated based on a reasonable allocation methodology which will include allocations based on the assets of the Funds or the number of shareholders of the Funds or other methodology the Manager determine is fair.

11. BROKERAGE COMMISSIONS

Total commissions paid to dealers for the years ended December 31, 2019 and 2018 in connection with portfolio transactions are as follows:

December 31 2019 December 31 2018 $ $ Exemplar Growth and Income Fund 274,109 139,261 Exemplar Investment Grade Fund 2,800 20,183 Exemplar Performance Fund 5,233 28,893

Soft Dollar Commissions

Total commissions used to purchase market data services by the Funds for the years ended December 31, 2019 and 2018 are as follows:

December 31, 2019 December 31, 2018 $ $ Exemplar Growth and Income Fund 88,833 33,764 Exemplar Investment Grade Fund - - Exemplar Performance Fund 15,040 23,914

12. INCREASE (DECREASE) IN NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE UNITS PER UNIT

The increase (decrease) in net assets attributable to holders of redeemable units per unit for the years ended December 31, 2019 and 2018 is calculated as follows:

66 EXEMPLAR FUNDS GENERAL NOTES TO THE AUDITED FINANCIAL STATEMENTS For the years ended December 31, 2019 and 2018

Increase (decrease) in net Increase (decrease) in net assets attributable to Weighted average assets attributable to holders of redeemable units redeemable units holders of redeemable units December 31, 2019 ($) outstanding during the year per unit ($) Exemplar Growth and Income Fund – Series A 1,531,470 4,368,456 0.35 Exemplar Growth and Income Fund – Series AN 644,345 2,625,833 0.25 Exemplar Growth and Income Fund – Series F 1,633,577 4,034,613 0.40 Exemplar Growth and Income Fund – Series FN 1,033,060 2,601,396 0.40 Exemplar Growth and Income Fund – Series I - - 0.00 Exemplar Growth and Income Fund – Series L 68,534 253,924 0.27 Exemplar Growth and Income Fund – Series LN 41,058 148,501 0.28 Exemplar Growth and Income Fund – Series ETF 356,150 363,356 0.98 Exemplar Investment Grade Fund – Series A 1,711,716 3,273,416 0.52 Exemplar Investment Grade Fund – Series AI 360,722 854,373 0.42 Exemplar Investment Grade Fund – Series AN 371,537 721,584 0.51 Exemplar Investment Grade Fund – Series F 4,855,331 8,363,016 0.58 Exemplar Investment Grade Fund – Series FI 1,059,615 2,509,138 0.42 Exemplar Investment Grade Fund – Series FN 1,433,869 2,483,823 0.58 Exemplar Investment Grade Fund – Series I 393 533 0.74 Exemplar Investment Grade Fund – Series G 13,232 64,371 0.21 Exemplar Investment Grade Fund – Series U (53) 7,065 (0.01) Exemplar Investment Grade Fund – Series ETF 381,244 362,603 1.05 Exemplar Performance Fund – Series A 1,912,481 838,682 2.28 Exemplar Performance Fund – Series AD 35,281 20,797 1.70 Exemplar Performance Fund – Series F 4,543,936 1,857,214 2.45 Exemplar Performance Fund – Series FD 63,165 27,402 2.31 Exemplar Performance Fund – Series I 1,077 461 2.34 Exemplar Performance Fund – Series L 375,759 168,763 2.23 Exemplar Performance Fund – Series LD 29,683 16,108 1.84

67 EXEMPLAR FUNDS GENERAL NOTES TO THE AUDITED FINANCIAL STATEMENTS For the years ended December 31, 2019 and 2018

Increase (decrease) in net Increase (decrease) in net assets attributable to Weighted average assets attributable to holders of redeemable units redeemable units holders of redeemable units December 31, 2018 ($) outstanding during the year per unit ($) Exemplar Growth & Income Fund - Series A 421,336 1,343,270 0.31 Exemplar Growth & Income Fund - Series AN 93,097 282,934 0.33 Exemplar Growth & Income Fund - Series F 264,209 437,499 0.60 Exemplar Growth & Income Fund - Series FN 336,356 890,608 0.38 Exemplar Growth & Income Fund - Series I 26,253 102,652 0.26 Exemplar Growth & Income Fund - Series L 17,915 63,103 0.28 Exemplar Growth & Income Fund - Series LN 9,920 28,092 0.35 Exemplar Growth & Income Fund - Series ETF 38,859 61,128 0.64 Exemplar Investment Grade Fund – Series A (357,062) 3,534,445 (0.10) Exemplar Investment Grade Fund – Series AI (43,987) 514,577 (0.09) Exemplar Investment Grade Fund – Series AN (56,685) 575,391 (0.10) Exemplar Investment Grade Fund – Series F (393,949) 8,863,126 (0.04) Exemplar Investment Grade Fund – Series FI (30,017) 657,255 (0.05) Exemplar Investment Grade Fund – Series FN (131,424) 1,597,747 (0.08) Exemplar Investment Grade Fund – Series I 23 516 0.04 Exemplar Investment Grade Fund – Series G 150,034 125,266 1.20 Exemplar Investment Grade Fund – Series ETF (17,671) 229,589 (0.08) Exemplar Performance Fund – Series A (890,921) 1,002,937 (0.89) Exemplar Performance Fund – Series AD (15,175) 23,273 (0.65) Exemplar Performance Fund – Series F (1,699,253) 1,951,985 (0.87) Exemplar Performance Fund – Series FD (27,444) 43,811 (0.63) Exemplar Performance Fund – Series I (261) 461 (0.57) Exemplar Performance Fund – Series L (222,572) 296,695 (0.75) Exemplar Performance Fund – Series LD (17,116) 27,484 (0.62)

13. TAXATION

The Funds qualify as mutual fund trusts under the Income Tax Act (Canada) (“Tax Act”). All of the Funds' net income for tax purposes and sufficient net capital gains realized in any year are required to be distributed to unitholders such that no income tax is payable by the Funds. As a result, the Funds do not record income taxes. Since the Funds do not record income taxes, the tax benefit of capital and non-capital losses would not be reflected in the Statements of Financial Position as a deferred income tax asset. The following are the capital and non-capital loss carryforwards:

Non-Capital Loss* Capital Loss** $ $ Exemplar Growth and Income Fund nil nil Exemplar Investment Grade Fund nil nil Exemplar Performance Fund 500,569 449,796 * Non-capital losses can be offset against income in future years for up to 20 years. ** Net Capital losses can be carried forward indefinitely for offset against gains in future periods.

14. SUBSEQUENT EVENT

The continued worldwide spread of novel coronavirus (or COVID-19) and its impact on international business operations, supply chains, travel, commodity prices, consumer confidence and business forecasts, and the associated impact on domestic and international equity markets and fixed income yields, is expected to have a material impact on all equity and fixed income portfolios during the first half of 2020, and potentially beyond. We continue to monitor developments in equity and fixed income markets generally, and in connection with the Fund’s portfolio in particular. While it is too early to predict the impact of COVID-19 related factors, during a time of increased uncertainty and volatility, we expect that the performance of all portfolios, including the Funds, will be affected in the near term.

68 MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL REPORTING

March 24, 2020

TO THE UNITHOLDERS AND TRUSTEE OF EXEMPLAR GROWTH AND INCOME FUND, EXEMPLAR INVESTMENT GRADE FUND, AND EXEMPLAR PERFORMANCE FUND (COLLECTIVELY THE “FUNDS”)

The accompanying audited financial statements have been prepared by Arrow Capital Management Inc. (“Arrow” or the “Manager” of the Funds), and approved by the Board of Directors of the Manager. The Manager is responsible for the information and representations contained in these financial statements.

The Manager maintains appropriate processes to ensure that reliable financial information is produced. The financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) and include certain amounts that are based on estimates and judgments. The significant accounting policies which management believes are appropriate for the Funds are described in Note 2 to the financial statements.

PricewaterhouseCoopers LLP is the external auditor of the Funds, appointed by the unitholders. They have audited the financial statements in accordance with Canadian generally accepted auditing standards to enable them to express to the unitholders their opinion on the financial statements. Their report is set out on the following page.

“James L. McGovern” “Robert W. Maxwell”

JAMES L. MCGOVERN ROBERT W. MAXWELL Managing Director & CEO Managing Director & CFO ARROW CAPITAL MANAGEMENT INC. ARROW CAPITAL MANAGEMENT INC. Independent auditor’s report

To the Unitholders and Trustee of Exemplar Growth and Income Fund Exemplar Investment Grade Fund Exemplar Performance Fund (individually, a Fund)

Our opinion

In our opinion, the accompanying financial statements of each Fund present fairly, in all material respects, the financial position of each Fund as at December 31, 2019 and 2018 and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards (IFRS).

What we have audited The financial statements of each Fund comprise: • the statements of financial position as at December 31, 2019 and 2018; • the statements of comprehensive income (loss) for the years then ended; • the statements of changes in net assets attributable to holders of redeemable units for the years then ended; • the statements of cash flows for the years then ended; and • the notes to the financial statements, which include a summary of significant accounting policies.

Basis for opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence We are independent of each Fund in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada. We have fulfilled our other ethical responsibilities in accordance with these requirements.

PricewaterhouseCoopers LLP PwC Tower, 18 York Street, Suite 2600, Toronto, Ontario, Canada M5J 0B2 T: +1 416 863 1133, F: +1 416 365 8215

“PwC” refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership. Other information

Management is responsible for the other information of each Fund. The other information comprises the Management Report of Fund Performance of each Fund.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements of each Fund, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements of each Fund or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of management and those charged with governance for the financial statements

Management is responsible for the preparation and fair presentation of the financial statements of each Fund in accordance with IFRS, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the ability of each Fund to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate any Fund or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the financial reporting process of each Fund.

Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole for each Fund are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements of each Fund.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the financial statements of each Fund, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control of each Fund.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. • Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the ability of each Fund to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements of each Fund or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause any Fund to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the financial statements of each Fund, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

The engagement partner on the audit resulting in this independent auditor’s report is Steven Wilson.

Chartered Professional Accountants, Licensed Public Accountants

Toronto, Ontario March 24, 2020 FUND INFORMATION

MANAGER AND PRINCIPAL DISTRIBUTOR

Arrow Capital Management Inc. 36 Toronto Street Suite 750 Toronto, ON M5C 2C5 Telephone: (416) 323-0477 Fax: (416) 323-3199 Toll Free: 1 (877) 327-6048

REGISTRAR RBC Investor Services 155 Wellington Street West, 5th Floor Toronto, ON M5V 3L3

CUSTODIAN CIBC Mellon 1 York Street, Suite 900 Toronto, ON M5J 0B6

AUDITOR

PricewaterhouseCoopers LLP PwC Tower 18 York Street, Suite 2600 Toronto, ON M5J 0B2 Arrow Capital Management Inc.

36 Toronto Street, Suite 750 ● Toronto, Ontario ● Canada M5C 2C5 ● Tel: 416.323.0477 ● Tel: 1.877.327.6048 ● Fax: 416.323.3199 ● www.arrow- capital.com